Finance Secretary Subhash Chandra Garg has disclosed that Prime Minister Narendra Modi as soon as referred to former Reserve Bank of India (RBI) Governor Urjit Patel as a “snake who sits over a hoard of money.”
In his upcoming ebook, titled ‘We Also Make Policy’, Garg revealed that PM Modi’s comment in opposition to Urjit Patel got here throughout an financial evaluation assembly on September 14, 2018.
Excerpts from Garg’s ebook, detailing the assembly and the occasions main as much as the resignation of Urjit Patel, have been revealed by the Indian Express newspaper. The ebook, which sheds mild on the tense relationship between the federal government and the RBI on the time, is scheduled for launch in October.
The revelation stems from a gathering held on September 14, 2018, the place PM Modi expressed frustration throughout a evaluation of the financial state of affairs. During this roughly two-hour assembly, Urjit Patel offered suggestions, all of which have been aimed on the authorities, with no proposed actions for the RBI past its ongoing efforts.
Garg acknowledged, “He (Patel) supplied some recommendations—all for the federal government to take and nothing for RBI to do, in addition to what it had been doing already.” According to Garg, Patel’s notion gave the impression to be that the RBI was not successfully addressing the state of affairs and was unwilling to take further steps to handle financial challenges or resolve variations with the federal government.
During this heated assembly, PM Modi’s comment likening Urjit Patel to a “snake who sits over a hoard of money” marked a notable shift in his demeanor. PM Modi urged Patel, in no unsure phrases, to convene a board assembly and work in session with then Finance Minister Arun Jaitley and the finance workforce to search out options for the problems at hand.
One of the contentious issues between the RBI and the federal government involved the switch of surplus funds from the RBI. Garg recalled a selected RBI board assembly in August 2017 when the federal government proposed retaining Rs 13,400 crore of the RBI’s surplus of Rs 44,200 crore for the fiscal 12 months 2016–17. Garg advocated for the whole switch of the excess to the federal government, in step with previous practices.
The tensions between the federal government and Urjit Patel had their roots in February 2018 when Patel launched a stringent framework for dealing with non-performing loans within the banking sector. This finally led to Patel’s resignation as RBI Governor on December 10, 2018, citing coverage disagreements with the federal government.
During the September 14 assembly, Patel offered a bleak evaluation of the financial state of affairs, providing solutions comparable to abolishing the long-term capital beneficial properties (LTCG) tax, considerably growing disinvestment targets, attracting investments from multilateral establishments in authorities bonds, and addressing pending payments of varied firms, together with micro, small, and medium-sized enterprises (MSMEs).
The RBI’s February 12 round, meant to handle non-performing loans, posed challenges for banks coping with loans to power-sector firms. Consequently, the federal government invoked Section 7 of the RBI Act, permitting it to situation directives to the RBI governor following consultations.
Garg emphasised that the RBI selected to not cooperate with the federal government on this matter and abstained from taking part in conferences of a committee chaired by the cupboard secretary tasked with discovering options. He acknowledged, “RBI determined to not work with the federal government on this. It didn’t attend the conferences of a committee constituted beneath the chairmanship of the cupboard secretary to search out options to the difficulty.”
