Urjit Patel, the governor of the Reserve Bank of India, seems to have started getting into the bad books of the government within a year of his appointment.
While the government had expected that Patel would help in the effort to accelerate economic growth by lowering interest rates and adopting other revival measures, it feels that he has not done enough.
Other than a 25-basis point reduction soon after taking charge, Patel has not made any changes in rates.
However, unlike his predecessors, Patel can’t solely decide the interest rates since he now shares the responsibility with the Monetary Policy Committee (MPC) that he heads.
The government has even been vocal about its disappointment over MPC and its procedures, including the three officials that it had nominated.
RBI is also said to be be moving slowly on deciding measures for the growing non-performing assets (NPAs), something for which even banks have been critical of.
Government’s contention with RBI first started over the manner in which it handled the Election Commission’s request to allow higher cash withdrawal for assembly elections candidates in Uttar Pradesh and four other states, to which RBI had said no.
Ironically, Patel is raising more eyebrows than his predecessor Raghuram Rajan, who was often considered to be not influenced by the government’s concerns.