Thursday 28 Mar 2024

Govt must protect central bank's independence: Rajan

| JULY 27, 2016, 12:00 AM IST

Mumbai: Taking on his detractors, Governor Raghuram Rajan on Tuesday said the criticism that RBI killed growth with high rates was at odds with “received wisdom” of India being fastest-growing and urged the government to look beyond 'motivated criticism' to protect the central bank's autonomy.

The outgoing Reserve Bank chief also rejected the argument that inflation has come down largely because of “good luck” stemming from low oil prices and not because of RBI's monetary policy measures, saying a significant part of decline in global prices has not been passed on domestically as the government has hiked excise on petrol and diesel.

Rajan, who has decided against a second term amid a spate of attacks including some of personal nature, rejected the criticism that he has kept the monetary policy “too tight” and blamed the slowdown in credit growth largely to stress in the public sector banks, stemming from “past mistakes in lending”.

He also appeared to blame “over-leveraged promoters” for voices against the clean-up at banks and said “some public sector bank CEOs with a short remaining tenure would prefer not taking stern action and recognizing NPAs” as they might “prefer transferring any problems to their successor”.

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