Opinion | A thin line divides RBI autonomy, alignment4 min read 18 Nov 2018, 07:51 PM IST
The past decade's steady sound of the government chipping away at RBI's powers and autonomy has now reached a crescendo
The tawdry, and discreditable, public feud between the government and the Reserve Bank of India (RBI) seems to indicate that, in the midst of many shortages, the government is hoarding reserves of surplus political capital. Governments usually pick their battles carefully, especially before crucial elections. In choosing to publicly lock horns with the central bank, the government is sending out differentiated messages to varied audiences, ranging from investors to banks, savers to borrowers, civil society to political operatives. But, in doing so, the government also risks running down its reserves of trust, goodwill and influence. Political capital is somewhat like cryptocurrency, non-physical and invisible but ephemeral and volatile when put to speculative use.