Against this backdrop, finance minister Arun Jaitley should grab the opportunity to reset relations with RBI once a new governor is appointed. First, the Indian political system has not yet fully digested the fact that the central bank has operational autonomy to pursue its legal goals. Even some of the more sophisticated commentators who have sided with the government in its battles with the central bank do not seem to have understood this plain fact. It is not that the way RBI operates is beyond reproach, but there is no doubt that the sustained attempts to cut the Indian central bank down to size is at least partly because of petty vindictiveness. The first was when Manmohan Singh was finance minister while C. Rangarajan was governor.

Source: Mint July 17, 2016 18:56 UTC