New Delhi, Dec 10: Already badly hit by its poor performance in most parameters, the ruling BJP led UPA government’s down-slide continued with the resignation of the RBI governor and an Union Minister on the same day.
In a letter posted on the RBI website, Patel cited personal reasons for stepping down from his position, effective immediately.
The letter said:
“On account of personal reasons, I have decided to step down from my current position effective immediately. It has been my privilege and honour to serve in the Reserve Bank of India in various capacities over the years. The support and hard work of RBI staff, officers and management has been the proximate driver of the Bank’s considerable accomplishments in recent years. I take this opportunity to express gratitude to my colleagues and Directors of the RBI Central Board, and wish them all the best for the future.”
Patel’s resignation has come on a day when IMF chief economist Maurice Obstfeld criticized the Indian government, saying it must heed the RBI’s message on financial stability says Firstpost.
Relations between the RBI and the government turned sour in October after the finance ministry started consultations under the never-before-used Section 7 of the RBI Act which empowers the government to direct the central bank to undertake certain policy measures in public interest.
The government had sent three letters to the RBI before 10 October with nearly a dozen demands, which were replied to within a week.
The government primarily wants the RBI to help the struggling non-bank lenders and MSMEs get some liquidity support, liberalize the prompt corrective action framework on 11 of the state-run banks and undertake other steps which will help push growth, while the RBI has been maintaining a conservative stance avoiding any bad precedents.
The government, which is staring at falling revenue and a likely fiscal slippage, also wants the RBI to part with a large portion of it Rs 9.6 trillion of its cash surplus, which the central bank has been sternly opposing.
As the public spat between the two got wider public attention, the RBI’s central board, at its 19 November meeting, had decided to climb down and decided to set up a panel to study the quantum of capital it requires apart from restructuring loans of up to Rs 25 crore to give a succor to the troubled MSMEs.
At the policy review held last week, the RBI had said it is committed to act as a lender of last resort to NBFCs but underlined that it does not feel the necessity do so now. It also formed a panel to look at the issues plaguing NBFCs which will submit its report in June 2019.
The frictions came to light through a public speech by deputy governor Viral Acharya, wherein he warned of investors’ wrath if the RBI’s autonomy is compromised.
After reports of action under Section 7 came up, the government had tried to ease tensions by stating that autonomy is “essential” and an accepted governance requirement.
I more bad news for the BJP, Union Minister Khushwa resigned form the government.
Kushwaha blasts Modi as he quits NDA
RLSP leader Upendra Kushwaha quit the BJP-led NDA and the Modi government, charging Prime Minister Narendra Modi with betraying Bihar and with pursuing an “opaque style of functioning and non-democratic leadership style”.
Kushwaha, who is the second BJP ally to quit the Modi government after the Telugu Desam Party (TDP), said in his resignation to Modi that the Union Cabinet “has been reduced to a mere rubber stamp”.
“Constitutional offices are being undermined and virtually every institution in the government has been subjected to political appropriation,” he said in the letter, echoing the charges increasingly made by the opposition.
“Ministers and officers posted in ministries have become figureheads as virtually all decisions are taken by you, your office and BJP President (which is anti-Constitutional).”
The Rashtriya Lok Samata Party leader said the government was pursuing “the agenda of RSS” which he said was “anti-Constitutional and neglecting and subverting the agenda of social justice enshrined in the Constitution for which we supported the NDA”.
Kushwaha has been at loggerheads with both the Bharatiya Janata Party and the Janata Dal-United (JD-U) for some time. As meetings he had sought with Modi and BJP President Amit Shah did not materialize, he came for praise from RJD leader Tejashwi Yadav.
“Having served in your Council of Ministers for the last 55 months, I stand dejected and betrayed by your leadership,” he said in the letter sent to Modi.
“There has been a fundamental conflict in what you have promised to the people before elections and what you have actually delivered after coming to power.”
“The promise of providing a special package (to Bihar) has been the biggest ‘jumla’,” he said in the resignation letter.
“The fact of the matter is that under your leadership grave and unprecedented injustice has been committed upon the people of Bihar, I say with a sense of deep regret and sorrow.”
He told the media that the government had been working to the agenda of the Rashtriya Swayamsewak Sangh (RSS) and that many with RSS background had been made Vice Chancellors across the country.
Asked if he would join an opposition alliance or merge his party with Sharad Yadav’s Loktantrik Janata Dal or work for a third alternative in Bihar, he said: “All options are open for us. We would be taking a call in the coming days.”