Privatising the RBI

Home , Arvind Subramanian, Raghuram Rajan, Shaktikanta Das

ISSN (Online) - 2349-8846

Privatising the RBI

In the article “Paranoia or Prudence? How Much Capital Is Enough for the RBI?” by Abhishek Anand, Josh Felman, Navneeraj Sharma, and Arvind Subramanian, published in EPW (8 December 2018), the authors have refrained from commenting on the adequacy of the Reserve Bank of India’s share capital, which has remained static at ₹ 50 million since the inception of the bank. I am not commenting on the content of this article, which I perceive as a pro-government note to take forward the idea that was mooted in the Economic Survey 2015–16, but withheld on being proved unwise by RBI’s erstwhile governor Raghuram Rajan. On this issue, no elucidation is needed beyond reading Rajan’s speech on “The Independence of the Central Bank,” delivered at St Stephen’s College in Delhi.

In a recent article, “Why Should the Government Own the RBI?,” in the Business Standard, dated 22 December 2018, T C A Srinivasa Raghavan opened a debate on the privatisation of the RBI which had fascinated me, especially his recommendation that the government should “in the interest of academic enquiry, commission a three-year project to examine the implications of re-privatising the RBI, to be led by Mr Rajan and Urjit Patel.” Raghavan’s apprehensions are largely due to past experiences of typical governmental lethargy for quick actions. However, some recent incidents have revealed that where there is a will, there is a way. One such, in the context of transforming the RBI to a “board-driven” professional entity, is the appointment of the new governor, Shaktikanta Das, in record time. ISSN (Online) - 2349-8846

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