New Delhi, Reserve Bank Governor Urjit Patel’s sudden resignation on Monday sent a shock wave across political and business arena as the country saw it as a mark of dissent and a clear danger to the credibility of the central bank.
Former RBI Governor Raghuram Rajan said: “It’s probably only the second resignation in its (RBI) history, may be the first explicit resignation and therefore we have to look at the circumstances that have led to it. It’s a statement of dissent and therefore the government has to be very careful in dealing with it…so that the autonomy of the institution as well as the credibility is preserved.”
Rajan said that the act of resignation is the “ultimate weapon” in a government appointee’s portfolio and they do not exercise it lightly. “To that extent we must look at this decision and understand why Dr Patel, who was appointed by this government, essentially exercised this particular option.”
Earlier, RBI Governor Patel shocked the country by announcing his resignation from the apex bank with immediate effect citing personal reasons. The resignation has generated apprehensions in the market and a political slugfest with Congress blaming the Modi government for Patel’s sudden departure.
Congress President Rahul Gandhi said the Modi government has been attacking the autonomy of the central bank which eventually has culminated in Patel’s resignation.
“We deprecate the systematic attack by the government on India’s economy through a select band of government nominees arbitrarily dictating the monitory policies and compromising RBI’s institutional integrity,” Gandhi said.
He added that India needs a truthful government that does not propagate falsehoods but steadfastly follows Constitutional values and conventions in letter and spirit and “respects the autonomy of institutions, and that will banish the current all-pervasive atmosphere of fear and intimidation”.
Even former Finance Miniser and Congress leader P. Chidambaram expressed his dismay over Patel’s sudden decision to demit office.
“Saddened, not surprised, by Dr Urjit Patel’s resignation. No self respecting scholar or academic can work in this government,” Chidambaram said in a tweet.
“November 19 was the day of reckoning. Dr Patel should have resigned on that day. Patel may have thought that government would re-trace its steps. I knew it would not. Good, he quit before another humiliating meeting.”
Patel’s resignation comes in the backdrop of an ongoing tiff between the government and the central bank over liquidity issue, RBI reserves and whether a board should drive RBI which provoked an extraordinary meeting of the RBI board on November 19.
Concerned over the reasons that led Patel to resign and worried about its fallout on the market, former RBI Governor C. Rangarajan said the government should immediately fill the gap.
“It is saddening since the resignation of RBI Governor will have its impact on the financial market. The government should act immediately and appoint a new Governor. Though he (Patel) has cited as personal reasons for quitting, obviously there must have been some reasons for his resignation,” Rangarajan told IANS.
As to the reason for his surprise, he said, “I had thought many of the issues (between RBI and the Central government) were resolved in the last board meeting of RBI and the remaining issues would also be sorted out.”
RBI board member S. Gurumurthy said Patel’s resignation is a setback to the effects of the convergence of views that was taking place.
“Surprised at the news that RBI governor has resigned. The previous meeting was held in such cordial atmosphere that it comes as a shock,” he said on twitter.
