The RBI's autonomy is only on paper and it is only an institution physically separated from the Central Government. All its functions are carried out in terms of the RBI Act of 1934 but with the tacit approval of the Government. As long as Government nominees are there on the RBI Board and Government expects RBI to get a clearance from the Ministry of Finance before announcement of any policy,there cannot be any autonomy for RBI.Further to make matters worse,the major chunk of the banking system through which RBI expects its monetary policy measures get transmitted to the economy is under the control of the Government with its Directors in each and evrery bank Board and with powers to override RBI to issue directives the way the Government wants. Even the worst part is that RBI has no powers to revise the Pension of its retired employees, although the pension needs to be paid on par with Central government employees and there is a clear understanding to that effect. Mr Bernanke can express his thinking liberally and rightfully so, but we have our own definition of autonomy which he may not understand.
Dr.T.V.Gopalakrishnan
(This comment is in response to Bernanke's message to new govt: Ensure RBI's autonomy that appeared in BS dated 16/4/14).
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