The Srikrishna Committee recommendations have sought to demolish the Indian economy’s financial architecture, said economist C.P. Chandrashekhar.
The panel’s suggestions will lead to a “regulatory capture” of a large part of the capital mobility, currency control and public debt management by the Finance Ministry, he said.
Chandrashekhar, who was here to address at the AGM of the RBI Employees’ Union, explained that the committee report had redefined monetary and financial regulatory powers.
Unbridled powers
He felt that the panel’s key suggestions had not only undermined the principles of separation of powers, but also the legislative sanctity of a democracy. “It is dangerous,” Chandrashekhar commented.
In his opinion, the concept of a ‘Unified Financial Authority,’ mooted by the committee, subsumes all financial powers, and creates a ‘homogenized financial supermarket’ where the Government or the Finance Ministry decides the growth targets and throws all prudent norms to the winds.
“Capital – domestic and foreign — will flow in and out unhindered. So will repatriation. The Finance Ministry will take a call on the overseas part and RBI will look after the insignificant domestic part”, he added.
The committee report, if accepted, would bring centralisation, the economist apprehended. He charged that it proposed management of systemic risks by the Finance Ministry and ushers in a culture of “renting” experts, often with questionable credentials or a particular mindset, by the Ministry or the Government.
“It may create a situation in which Parliament, representing the popular opinion, will come in conflict with the experts”, the economist felt.