New Delhi:Reserve Bank of India (RBI) governor Urjit Patel on Friday praised the government for undertaking courageous reforms, such as flexible inflation targeting, establishing the Goods and Services Tax (GST) Council and the enactment of the Insolvency and Bankruptcy Code.

“One cannot and should not underestimate the sagacity and uncommon courage of the government to undertake reforms that can only be described as truly transformative. These will shape, for the better, our economic evolution in the years and decades to come," Patel said at the convocation ceremony at the Meghnad Desai Academy of Economics.

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Patel’s comments come at a time when the central bank and the government have been at loggerheads over the RBI’s lack of regulatory and supervisory powers over state-run banks.

In 2016, the government had amended the RBI Act to specify that the monetary policy framework should work to maintain price stability, while keeping in mind the objective of growth.

“This was a fundamental shift in the institutional architecture for the conduct of monetary policy, with the formal transition to a flexible inflation targeting framework and the relinquishing of the monetary policy decision by the governor to a six-member monetary policy committee."

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Patel said the establishment of the GST Council has created one of the most effective institutional mechanisms for cooperative federalism. “Along with the state governments, it has offered a refreshing counter-narrative to the divisive course of the international federal dialogue, voluntarily choosing to relinquish and then pool sovereignty for a larger collective cause."

According to Patel, the “enactment of the Insolvency and Bankruptcy Code, 2016, (IBC) is a watershed towards improving the credit culture in our country".

IBC provides for a single-window, time-bound process for resolution of assets with an explicit emphasis on promotion of entrepreneurship, maximisation of value of assets, and balancing the interests of all stakeholders, he said.

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“These steps are unprecedented in the history of our nation in that they show the government’s commitment to sound public policy by establishing institutions and ceding power to them to perform functions vital for securing and entrenching macroeconomic and financial stability."

The RBI governor also stressed the need to understand micro-level price formation dynamics in new dimensions such as e-commerce, digital transactions and big cross sectional data. This applies to domains such as banking, non-banking financial intermediation, payments, currency management and financial inclusion as well, he added.