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A day after Urjit Patel resigned as the Reserve Bank of India (RBI) Governor, former central bank head D Subbarao said the successor will have the task of restoring credibility and autonomy of the institution.
He also said that it seems like Patel was pushed beyond a level of comfort leading to his resignation.
The former governor, who also had differences with the Centre, expressed confidence that the government has maturity and experience and they will introspect on Patel’s resignation.
“They (government) will also perhaps examine in what way they will have to push their agenda. Push is a wrong word. In what way they can push their agenda, what limit they can push it, at what point of time they have to withdraw.
“The government will have to do serious introspection...the next incumbent governor, who she or he may be, will of course have task of restoring creditability of RBI and entering into working arrangement with the government which does not give the impression of being influenced beyond acceptable levels by the government,” he told the media.
The Centre should choose a candidate who can command respect from the market, he said.
Citing personal reasons, Patel unexpectedly resigned on Monday, four days ahead of a crucial meeting of the board of the central bank that could have discussed issues of simmering differences with the government.
He is the first governor since 1990 to step down before his term ends.
Patel’s three-year term was to end in September 2019 and he was eligible for a second term like most of his successors barring a few like his outspoken predecessor Raghuram Rajan.
For last few weeks, he seemed to have been at loggerheads with the finance ministry on matters ranging from the appropriate size of the reserves the central bank must hold to the easing of lending norms for sectors such as small and medium enterprises.
The differences came out in the open when Deputy Governor Viral Acharya, in a hard-hitting speech in October, talked about the independence of the central bank, arguing that any compromise could be “potentially catastrophic” for the economy.
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