Reserve Bank of India Governor Urjit Patel should either work in tandem with the Central government or submit his resignation, a key figure of the Rashtriya Swayamsevak Sangh’s economic wing told Reuters in an interview.
Ashwani Mahajan, the chief of the Hindu nationalist group’s economic wing Swadeshi Jagran Manch told the newswire in an interview that Patel must “restrain his officials from making differences public”, thus fanning news of the widening rift between the central bank and the government.
The tensions between the RBI and the government escalated on Oct. 26, after Deputy Governor Viral Acharya in a hard-hitting speech highlighted the importance of ensuring that the central bank’s independence isn’t compromised.
On Wednesday morning, BloombergQuint reported that the government had written to the RBI seeking consultation under Section 7 of the RBI Act. This section, which allows the government to issue directions to the RBI after consultation with the governor, has never been invoked before. Mahajan said that the government had every right to use the powers of the RBI Act.
Around midday, the government issued a clarification, defending its right to consult with the central bank on policy differences, even as it maintained that both sides “in their functioning, have to be guided by public interest and the requirements of the Indian economy”.
The RBI has called for the next meeting of the central board on Nov. 19, three people familiar with the matter told BloombergQuint on condition of anonymity.
