Government debt sustainability is political issue: Duvvuri Subbarao, RBI

MUMBAI: Reserve Bank of India governor Duvvuri Subbarao, who has been warning the Indian government about the deteriorating fiscal position, said that central banks commenting on sovereign debt size may be beyond their remit since debt is a political issue.

"Sovereign debt sustainability is quintessentially a political issue," said Subbarao. "How much debt a government should raise is a political issue and, once the central banks become mindful of that, there is a risk that not only they might fail, but they might be crossing the line of being apolitical."

Central banks across the globe, including the European Central Bank, are being tested on their independence with them being forced to step in to save sovereign governments such as Greece and Portugal by indirectly supporting the fiscal profligacy.

ECB had to "bend and stretch", said Subbarao.