New Delhi: The Union finance ministry defended the Centre on Saturday, saying it fully respects the independence and autonomy of the Reserve Bank of India (RBI), following criticism of the government for "interfering" with India's top monetary authority's functioning on demonetisation.
Opposition parties attacked the Centre on Saturday, a day after a union of the central bank employees wrote to RBI governor Urjit Patel, protesting operational "mismanagement" after the November 8 recall of high-value currency. The employees alleged the Centre impinged on the RBI's autonomy by appointing an official for currency coordination.
"There has been a report in sections of the press that some unions have alleged infringement of the RBI's autonomy. It is categorically stated that the government fully respects the RBI's independence and autonomy," the ministry said.
It said consultations between the government and the RBI are undertaken on various matters of public importance, either mandated by law or evolved as a practice. "Such consultations should not be taken as infringement of the RBI’s autonomy," the finance ministry said.
The RBI employees’ union had said that if it was true that Centre had sent a joint secretary to coordinate currency chest operations to stay on top of the demonetisation process, it impinged on the central bank’s autonomy as it did not require any assistance. The union said it was "painful" to note that the RBI was being criticised for its "operational mismanagement", denting its image "beyond repair".
The Opposition quickly latched on to the RBI employees’ letter to attack the government amid doubts about the central bank’s independence for agreeing to the implementation of demonetisation with limited preparation.
"This letter from RBI employees is a huge indictment of the Modi government, its attempts to undermine other institutions," CPI(M) general secretary Sitaram Yechury said on Saturday.
The demonetisation decision that led to a crippling cash shortage across the country has been hugely controversial. The RBI has told a Parliamentary panel that the government had advised it to go for demonetisation on November 7, and the board of the central bank recommended the move the very next day.
The government has said in Parliament that it merely acted on the RBI’s advice to demonetise Rs 1,000 and Rs 500 notes to target black money, corruption and terror funding.
"I don’t think that the employees of a government institution, especially an independent and respectable institution like the RBI, have ever before written against its national policy,” Congress leader Sandeep Dikshit said.
