RBI Chief’s Resignation

Urjit Patel, governor of the Reserve Bank of India (RBI) resigned suddenly on Monday. This is something that leads to all kinds of speculations and questions about what could have really happened to make Patel resign so abruptly. That Patel’s resignation should have come at a time when he had earned the confidence of Prime Minister Narendra Modi seems all the more surprising. On Twitter, Modi praised Patel as a “thorough professional with impeccable integrity”. “He steered the banking system from chaos to order and ensured discipline. Under his leadership, the RBI brought financial stability. He leaves behind a great legacy. We will miss him immensely,” Modi said. Patel, who was a deputy governor of the RBI and has an academic background, has said that he was resigning on account of personal reasons. Of late, this has been the most popular reason cited for resignations. According to Yashwant Sinha, a fomer BJP Finance Minister, “The resignation is a clear sign of the government trying to interfere with the working of the RBI.” While the government is unlikely to part with the real reasons for Patel’s decision to resign so suddenly, the general impression is that with the general elections drawing near, the government wants the RBI to make loans easier to get and to hand over some of the surplus reserves to help finance the fiscal deficit. The government should keep its long-term goals in mind and turn a deaf ear to ad hoc short-sighted demands.