The Government's interference with RBI has started with the withdrawal of updating of Pension to its Retirees way back in 2007.Then the setting up of FSDC taking away RBI powers over the Financial system has dealt a deathblow to RBI' independence This was followed by the appointment of additional Directors from the MOF as Nominees in RBI Board followed by demand of interim dividends and the entire surplus of RBI's income by the Government. Forcing two professional economists Governors to quit was the final blow killing the Institution and taking away the Concept of independence of Central Bank .Less said the better about the way RBI is treated and the banking system is manipulated to suit more the politics than the economics of the nation.The balancesheets of the Government and the RBI are getting weaker and weaker every passing day. Forget about the twin unhealthy balance sheets of the Corporates and the banks. They are weak beyond imagination. Good to hear some voices like Dr Reddy on the subject. Some intellectual satisfaction and food for serious thoughts. Good Economics and Good Politics cannot go together in a democratic set up is what it all indicates.
Dr T V Gopalakrishnan
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