Quelling the talks of differences between the Reserve Bank of India (RBI) and the government, RBI Governor Raghuram Rajan has said that though there were some issues on which the government and the central bank were “trying to persuade one another” but on many others the two sides are on the same page.
The governor further stated that if there was a perception of conflicts in the RBI then there was some rationale to having an independent agency to take over and cautioned that conflicts were on both sides as the government also owns public sector banks and the LIC. The same conflict that existed in the RBI shouldn’t be transferred to the proposed entity which might end up having closer links with the government.
Public Debt Management Authority (PDMA) is supposedly going to be an issue on which RBI and government differ. The PDMA will take over from the RBI the task of managing the Centre’s borrowings. In his Budget speech, Jaitley had proposed establishment of an independent public debt management office and had said that except for Russia, China and few countries, it has been entirely shifted to the government from the central bank.
Earlier, Finance Minister Arun Jaitley too has asserted that there were no differences between the government and the RBI. He has said that we need to manage inflation along with growth. Now we cannot afford to have inflation go up radically so the RBI is a little conservative and they try and manage the inflation so they are a little careful in lowering the interest rates.