The Reserve Bank of India’s Governor Urjit Patel resigned from his post citing “personal” reasons. Patel was appointed Governor in 2016 for a three-year term which was to expire in September next year. In his resignation letter he stated “On account of personal reasons, I have decided to step down from my current position effective immediately”.
Analysts cite differences of opinion between the RBI and the government to be the reason behind Patel’s resignation. It is argued that the Government was putting pressure on the RBI to enhance liquidity so as to boost economic growth ahead of Lok Sabha elections something that was not favoured by Patel. The Central Government also wanted the RBI to provide additional liquidity to the MSME sector in the wake of ILFS bankruptcy.
The tussle for autonomy of the RBI became undeniable when Deputy Governor of RBI Viral Acharya on October 27 said that Government “don’t respect the RBI’s independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution”.