Text book independence for RBI is dangerous: Reddy
The outgoing RBI governor Yana Venugopal Reddy on Friday cautioned that text book independence for the central bank is dangerous in the Indian context.
By PTI |
MUMBAI: The outgoing RBI governor Yana Venugopal Reddy on Friday cautioned that text book independence for the central bank is dangerous in the Indian context.
Talking to newspersons after handing over the baton to his successor D Subbarao, Reddy said, "Text book independence of Central Bank is dangerous in the Indian context."
Independence should be based on mutual trust between the government and the apex bank, he added.
Looking back at his tenure which saw a series of hikes in lending rates, he said there was a compulsion to increase cash reserve ratio and repo rates.
"Managing high growth with low inflation required good balance. Besides, there were large external capital flows in the last five years which had an involuntary impact on money supply. It was a challenge," he said.
"I have not done anything directionally wrong", Reddy added.
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Responding to his policy of not letting rupee appreciate to contain inflation, Reddy said too much of appreciation of rupee amid rising deficit levels could have hurt. He referred to the country's exchange rate policy as one of the best.
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