Wednesday, December 11, 2024

Different, but the same.

"Sanjay Malhotra, the revenue secretary, has been appointed as new Reserve Bank of India (RBI) governor by the Narendra Modi government." "Sanjay Malhotra, a 1990 batch Indian Administrative Service (IAS) Officer from the Rajasthan cadre, holds a Bachelor's degree from IIT Kanpur and earned his Master's in Public Policy from Princeton University." TOI. He takes over from Mr Shaktikanta Das, who was a retired IAS officer with a Master's degree in History, when he was appointed as the Governor of RBI in December 2018. wikipedia. Mr Malhotra held a press conference in which, "Underscoring the value of consultation in policy-making, he pledged to continue the RBI's practice of engaging with stakeholders. He added that knowledge and expertise are not the monopoly of any one institution and consultation will remain a key pillar of our policy making process." Mint. "Though originally privately owned, since nationalisation in 1949, the Reserve Bank of India is fully owned by the government of India." Its Preamble directs it "to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping in mind the objective of growth." rbi.org.in. Hence, "consultation" will decide policy and "knowledge and expertise" in economics is not necessary. "Since its inception in 1935, the RBI has had 25 governors," and "Of them, as many as 14 were civil servants, seven were professional economists, three were from the financial sector and only one from the RBi cadre of officers." Mr Modi had difference of opinion with Prof Raghuram Rajan and Prof Urjit Patel, both economists, and hence prefers civil servants. The Print. Prof Rajan opposed the demonetisation of Rs 1000 and Rs 500 notes (HT) which failed in its objectives and was disastrous for the economy as growth fell to 4% in 2019-20 (Mint). Demonetisation was imposed suddenly on 8 November 2016 (wikipedia) and the GDP growth rate fell precipitously from 8.26% in 2016 to a mere 3.87% in 2019 (Forbes), the year before Covid pandemic. Prof Patel resigned in December 2018, nine months before his tenure was to end. ET. It was because he refused to allow the government to loot Rs 2-3 trillion from RBI reserves to win the general election in 2019, wrote former RBI Deputy Governor Viral Acharya. With Mr Das as governor, the RBI transferred Rs 1.76 trillion to the government in 2019. TOI. Much better to appoint an IAS officer who will prefer "consultation" to "knowledge and expertise". "The structure of the UPSC (Union Public Service Commission) is such that people enter the IAS with a variety of educational backgrounds, and end up in a system where a potato expert is looking after defence, a veterinary doctor is supervising engineers, a history graduate is dictating health policy and so on. The scheme of transfers and postings is such that there is no match between the expertise of an officer and the post she is expected to hold." "What the senior IAS officer at the most does is that he acts as an interpreter between a marginalized technocrat and the semi-literate politician," wrote Shah Faesal. Hence the need for consultations. How frequently?    

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