This post has been self-published on Youth Ki Awaaz by Priyansh Verma. Just like them, anyone can publish on Youth Ki Awaaz.

RBI’s Autonomy Is Under Threat, And It’s A Bad Sign For The Indian Economy

More from Priyansh Verma

Narendra Modi on his Twitter account lauded Dr. Urjit Patel’s contribution to the Reserve Bank of India. Modi said, “Dr. Urjit Patel is a thorough professional with impeccable integrity.” Perhaps, it’s because of this quality, Dr. Patel chose to resign from his post, as RBI Governor.

Though Urjit Patel has cited personal reasons for his resignation, it will not be unwise to envisage, that Patel quit as his professional integrity could have been compromised in the ongoing tussle between RBI and the central government.

Ever since, Viral Acharya, Deputy Governor of RBI, in a speech at Mumbai, mentioned the need for maintaining the central bank’s autonomy from the government, there were speculations, that Urjit Patel could make such a move. And since it has happened, it becomes utmost important for us to understand the reasons behind such a decision and how important is it for the RBI to function independently.

The central bank is a major institution that has the job of framing the monetary policy of the country. The monetary policy is the process through which the RBI monitors the money supply within the country’s economy, to achieve macroeconomic stability; which focuses on inflation, consumption, growth and liquidity. All such policies are made and monitored by keeping in mind the pace of economic growth.

The government, on the other hand, i.e. the Ministry of Finance, makes the fiscal policy, through which the govt. adjusts its spending levels and tax rates. If in any situation the govt. decides to increase public spending, to boost the economy, the money supply will increase. And due to which, the inflation rate will spike up. At this moment, the central bank through monetary policy will hike interest rates, which will contain the inflation, and keep the economy on track.

Presently, the Govt. of India is trying to influence the policies of RBI. Why? Because of its populist measures.

Due to the large NPA crisis of the commercial banks, RBI had formulated a PCA framework, which dealt with containing the credit, that the banks may provide. And this PCA framework has stringent norms, which hurts credit growth.

Further, the govt. has also demanded the RBI to provide relief to NBFCs which are struggling with crash crunch, after the IL&FS episode; and RBI has refused to change its stance.

Another issue is of using the RBI reserves – that RBI uses for maintaining financial stability – to fund the govt.’s fiscal needs. The govt. has fixed the fiscal deficit target to 3.3% of the GDP, and due to various political and economic reasons, the govt. fears that this target may not be met; unless it finds another source of revenue, besides borrowing. RBI again has refused to oblige.

Viral Acharya, in his speech, had spoken about Argentina’s central bank and had made an analogy with the present situation. Argentinian govt. in 2010 had pressurised its central bank to transfer $6.6 billion of its reserves to the national treasury. Following which, Argentine sovereign bond yield shot up by 250 basis points; which means, that the macroeconomic situation had deteriorated, and particularly, inflation had risen.

That being said, the RBI reserves transfer and allocation of its surplus income is being debated, as of now. And a high-level committee shall be set up soon, to examine the RBI’s Economic Capital Framework (ECF).

Upon the resignation of Urjit Patel, former RBI Governor, Dr. Raghuram Rajan in an interview to ET said, “It is saying that the person cannot stay on given the kinds of policies that are being thrust upon him. It is really the only act that they have in their reservoir when faced with circumstances they cannot deal with. So in that sense this should be seen as a statement of protest and given that Dr Patel is a very honourable civil servant in some sense and a regulator, I think we need to understand what prompted this act.” 

Mint Street and North Block should work together, with respecting each other’s opinions and concerns. There have been conflicts between RBI and Finance Ministry before, but the level of disagreement that is happening now is unprecedented. It was reported recently, that the govt. may use Section 7 of the RBI Act, which has never been used before. This section empowers the govt. to issue directions to the central bank in public interest, otherwise, the central bank works independently. With Urjit Patel’s resignation, it seems that the imposition of this section is inevitable.

It’s interesting to note, that within the Modi govt. Dr. Rajan didn’t serve a full five-year term, Urjit Patel resigned (and didn’t serve his 3-year term), former CEA Arvind Subhramanian resigned, and former NITI Aayog vice chairman Arvind Panagriya also resigned. And all of them resigned due to personal reasons, which is very convenient.

I don’t think there is any better explanation — to what may transpire in the economy if the RBI’s autonomy is impeded — than what Viral Acharya had said, The governments that do not respect their central bank’s independence would sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined the regulatory institution.”

Simply put, Modi govt.’s short-term fiscal needs can prove catastrophic to the Indian economy in the longer run. And no country can be benefitted by having a man heading the central bank, who concedes to all the demands of the govt. Undoubtedly, RBI’s autonomy is under threat.

Subramanian Swamy has said,” The Prime Minister should call him (Urjit Patel) and find out what could be the personal reasons, and dissuade him from leaving.” 

Lastly, Modi Bhakts should surely understand the immensity of this resignation.

You must be to comment.
  1. Sudhir Verma

    It’s a very good analysis.

More from Priyansh Verma

Similar Posts

By Sara Sharma

By Simran Mendon

By shakeel ahmad

Wondering what to write about?

Here are some topics to get you started

Share your details to download the report.

We promise not to spam or send irrelevant information.

Share your details to download the report.

We promise not to spam or send irrelevant information.

An ambassador and trained facilitator under Eco Femme (a social enterprise working towards menstrual health in south India), Sanjina is also an active member of the MHM Collective- India and Menstrual Health Alliance- India. She has conducted Menstrual Health sessions in multiple government schools adopted by Rotary District 3240 as part of their WinS project in rural Bengal. She has also delivered training of trainers on SRHR, gender, sexuality and Menstruation for Tomorrow’s Foundation, Vikramshila Education Resource Society, Nirdhan trust and Micro Finance, Tollygunj Women In Need, Paint It Red in Kolkata.

Now as an MH Fellow with YKA, she’s expanding her impressive scope of work further by launching a campaign to facilitate the process of ensuring better menstrual health and SRH services for women residing in correctional homes in West Bengal. The campaign will entail an independent study to take stalk of the present conditions of MHM in correctional homes across the state and use its findings to build public support and political will to take the necessary action.

Saurabh has been associated with YKA as a user and has consistently been writing on the issue MHM and its intersectionality with other issues in the society. Now as an MHM Fellow with YKA, he’s launched the Right to Period campaign, which aims to ensure proper execution of MHM guidelines in Delhi’s schools.

The long-term aim of the campaign is to develop an open culture where menstruation is not treated as a taboo. The campaign also seeks to hold the schools accountable for their responsibilities as an important component in the implementation of MHM policies by making adequate sanitation infrastructure and knowledge of MHM available in school premises.

Read more about his campaign.

Harshita is a psychologist and works to support people with mental health issues, particularly adolescents who are survivors of violence. Associated with the Azadi Foundation in UP, Harshita became an MHM Fellow with YKA, with the aim of promoting better menstrual health.

Her campaign #MeriMarzi aims to promote menstrual health and wellness, hygiene and facilities for female sex workers in UP. She says, “Knowledge about natural body processes is a very basic human right. And for individuals whose occupation is providing sexual services, it becomes even more important.”

Meri Marzi aims to ensure sensitised, non-discriminatory health workers for the needs of female sex workers in the Suraksha Clinics under the UPSACS (Uttar Pradesh State AIDS Control Society) program by creating more dialogues and garnering public support for the cause of sex workers’ menstrual rights. The campaign will also ensure interventions with sex workers to clear misconceptions around overall hygiene management to ensure that results flow both ways.

Read more about her campaign.

MH Fellow Sabna comes with significant experience working with a range of development issues. A co-founder of Project Sakhi Saheli, which aims to combat period poverty and break menstrual taboos, Sabna has, in the past, worked on the issue of menstruation in urban slums of Delhi with women and adolescent girls. She and her team also released MenstraBook, with menstrastories and organised Menstra Tlk in the Delhi School of Social Work to create more conversations on menstruation.

With YKA MHM Fellow Vineet, Sabna launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society. As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

Read more about her campaign. 

A student from Delhi School of Social work, Vineet is a part of Project Sakhi Saheli, an initiative by the students of Delhi school of Social Work to create awareness on Menstrual Health and combat Period Poverty. Along with MHM Action Fellow Sabna, Vineet launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society.

As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

Find out more about the campaign here.

A native of Bhagalpur district – Bihar, Shalini Jha believes in equal rights for all genders and wants to work for a gender-equal and just society. In the past she’s had a year-long association as a community leader with Haiyya: Organise for Action’s Health Over Stigma campaign. She’s pursuing a Master’s in Literature with Ambedkar University, Delhi and as an MHM Fellow with YKA, recently launched ‘Project अल्हड़ (Alharh)’.

She says, “Bihar is ranked the lowest in India’s SDG Index 2019 for India. Hygienic and comfortable menstruation is a basic human right and sustainable development cannot be ensured if menstruators are deprived of their basic rights.” Project अल्हड़ (Alharh) aims to create a robust sensitised community in Bhagalpur to collectively spread awareness, break the taboo, debunk myths and initiate fearless conversations around menstruation. The campaign aims to reach at least 6000 adolescent girls from government and private schools in Baghalpur district in 2020.

Read more about the campaign here.

A psychologist and co-founder of a mental health NGO called Customize Cognition, Ritika forayed into the space of menstrual health and hygiene, sexual and reproductive healthcare and rights and gender equality as an MHM Fellow with YKA. She says, “The experience of working on MHM/SRHR and gender equality has been an enriching and eye-opening experience. I have learned what’s beneath the surface of the issue, be it awareness, lack of resources or disregard for trans men, who also menstruate.”

The Transmen-ses campaign aims to tackle the issue of silence and disregard for trans men’s menstruation needs, by mobilising gender sensitive health professionals and gender neutral restrooms in Lucknow.

Read more about the campaign here.

A Computer Science engineer by education, Nitisha started her career in the corporate sector, before realising she wanted to work in the development and social justice space. Since then, she has worked with Teach For India and Care India and is from the founding batch of Indian School of Development Management (ISDM), a one of its kind organisation creating leaders for the development sector through its experiential learning post graduate program.

As a Youth Ki Awaaz Menstrual Health Fellow, Nitisha has started Let’s Talk Period, a campaign to mobilise young people to switch to sustainable period products. She says, “80 lakh women in Delhi use non-biodegradable sanitary products, generate 3000 tonnes of menstrual waste, that takes 500-800 years to decompose; which in turn contributes to the health issues of all menstruators, increased burden of waste management on the city and harmful living environment for all citizens.

Let’s Talk Period aims to change this by

Find out more about her campaign here.

Share your details to download the report.

We promise not to spam or send irrelevant information.

A former Assistant Secretary with the Ministry of Women and Child Development in West Bengal for three months, Lakshmi Bhavya has been championing the cause of menstrual hygiene in her district. By associating herself with the Lalana Campaign, a holistic menstrual hygiene awareness campaign which is conducted by the Anahat NGO, Lakshmi has been slowly breaking taboos when it comes to periods and menstrual hygiene.

A Gender Rights Activist working with the tribal and marginalized communities in india, Srilekha is a PhD scholar working on understanding body and sexuality among tribal girls, to fill the gaps in research around indigenous women and their stories. Srilekha has worked extensively at the grassroots level with community based organisations, through several advocacy initiatives around Gender, Mental Health, Menstrual Hygiene and Sexual and Reproductive Health Rights (SRHR) for the indigenous in Jharkhand, over the last 6 years.

Srilekha has also contributed to sustainable livelihood projects and legal aid programs for survivors of sex trafficking. She has been conducting research based programs on maternal health, mental health, gender based violence, sex and sexuality. Her interest lies in conducting workshops for young people on life skills, feminism, gender and sexuality, trauma, resilience and interpersonal relationships.

A Guwahati-based college student pursuing her Masters in Tata Institute of Social Sciences, Bidisha started the #BleedwithDignity campaign on the technology platform, demanding that the Government of Assam install
biodegradable sanitary pad vending machines in all government schools across the state. Her petition on has already gathered support from over 90000 people and continues to grow.

Bidisha was selected in’s flagship program ‘She Creates Change’ having run successful online advocacy
campaigns, which were widely recognised. Through the #BleedwithDignity campaign; she organised and celebrated World Menstrual Hygiene Day, 2019 in Guwahati, Assam by hosting a wall mural by collaborating with local organisations. The initiative was widely covered by national and local media, and the mural was later inaugurated by the event’s chief guest Commissioner of Guwahati Municipal Corporation (GMC) Debeswar Malakar, IAS.

Sign up for the Youth Ki Awaaz Prime Ministerial Brief below