Source: The Hitavada      Date: 11 Dec 2018 11:49:48

JUST a few days ago when Dr. Urjit Patel stoically refused to comment on the dispute between the Reserve Bank of India (RBI) and the Government, some people had read that as a rather ominous sign. Those fears came true when Dr. Patel tendered his resignation from the coveted post citing ‘personal reasons’. That the resignation has come in the thick of an unseemly controversy, is unfortunate, to say the least. This should not have happened at all -- in the larger interest of India’s monetary management at a time when things are showing good signs on many fronts. It is almost obvious that the Government was aware of what may come, considering the response from Prime Minister Mr. Narendra Modi and Finance Minister Mr. Arun Jaitley that they appreciated Dr. Urjit Patel’s services to the nation. No matter what happened behind the scenes, it is clear that the nation could have done well without this episode. But then, history often demonstrates its power around unexpected twists or even blind corners.

That the RBI Chief quits in the wake of reported controversy about the powers of the Central bank vis-a-vis those of the Government, is something the nation will have to sort out in due course of time. Reportedly, the Government and the Reserve Bank were debating on several issues that included the Government’s power to seek clarifications and explanations from the Central bank. It claimed that the Section 7 of the Reserve Bank of India Act empowered it to do so.

On this count, perhaps, constitutionally speaking, there might not much to dispute. Yet, then came to fore another point -- about the Government seeking a slice of the federal reserves that the RBI controls. For a while, it seemed that the RBI might agree to shell out some of the money, though after some haggling. Instead, what came to fore was Dr. Urjit Patel’s resignation, which would certainly shock the commoners in the streets.

Several critical issues appear to be involved in the episode -- involving the Central bank’s constitutional autonomy, the Government’s power to raise questions on the Central bank’s management of its mandated tasks, and also the sovereign umbrella that holds itself aloft over everything that happens in India, offering definitions of institutions and their mandates, of the core principles of governance, of difference between the fundamentals of sovereignty and autonomy.

There could be many political interpretations as well of this episode. In fact, since the time Dr. Raghuram Rajan demitted office of RBI Governor at the end of his tenure to the time when Dr. Urjit Patel stepped down, the relations between the federal Government and the federal bank were under discussion and close scrutiny of several quarters. Most unfortunately, however, most of those quarters only concentrated on the issue of the Central bank’s autonomy, but did not lend much thought to the issue of the Government’s sovereign authority to oversee the working of the institutions under the umbrella.

Even as we realise that Dr. Urjit Patel need not have resigned in this manner, we also feel that this episode has given the nation an opportunity to discuss the issue in greater detail and to greater depth. There is no doubt that the principle autonomy to top institutions is a major principle of governance in a democratic set up. Yet, it is equally necessary for the nation to make up its mind -- constitutionally, legally, and spiritually -- about the power of the sovereign and where sovereignty is vested. Let us insist that we are not talking about supremacy of one institution and the secondary position of another. Fundamentally, we are talking about the core value of governance. At a time when India is about to take a great leap of faith into an economically bright future, this issue needs to be resolved post-haste.