Working Autonomy

RBI The Sovereign Scapegoat:
This refers to the article on RBI : The Sovereign Scapegoat (Business Line dt,1/04/10). The very title speaks volumes of the so called autonomy or independence enjoyed by the Reserve bank of India, the monetary authority of the country and the regulator of the financial system. The institution originally set up as a shareholders bank in 1935 was nationalized in 1949 and since then has been functioning as an independent institution but owned fully by the Central Government with adequate overruling powers in terms of The Reserve Bank of India Act 1934.

Political agenda of the ruling party will always override the economic agenda and the institutions like RBI in a democratic set up cannot expect to have the full freedom as some of the central banks of the world enjoy perhaps. With all the limitations , the Reserve Bank has done an excellent job and successfully completed 75 years managing the economy and the financial system well and earned a reputation as one of the well run central banks of the world only indicates how independently the Governors carry out their responsibilities although they are appointed by the Central Government. The working autonomy is achieved and not defined anywhere. This is where RBI and its Governors can be proud of.
Dr T.V.Gopalakrishnan