Reserve Bank of India Governor Urjit Patel should work in sync with the Centre or should resign, the head of the Rashtriya Swayamsevak Sangh’s economic wing, the Swadeshi Jagran Manch, has said. Ashwani Mahajan told Reuters on Wednesday that Patel should restrain his officials from making the differences between the government and the central bank public.

The government is reportedly upset about a remark made by one of Patel’s deputies, Viral Acharya, on Friday, when he warned that undermining a central bank’s independence was “potentially catastrophic”. On Wednesday however, the Finance Ministry issued a statement in support of the central bank’s autonomy.

In the interview to Reuters, Mahajan said: “If he [Patel] doesn’t follow discipline, it would be better for him to resign.”

Mahajan, the co-convenor of the Swadeshi Jagran Manch, also opposed the appointment of foreign-trained economists at the central bank, and said one of the “talented persons with nationalist vision” on the RBI board could replace Patel if he resigned.

A senior leader of the Swadeshi Jagran Manch, S Gurumurthy, was appointed to the RBI board in August.

Mahajan alleged that the RBI’s higher interest rates were hitting small businesses. “RBI is adamant, ignoring India’s ground realities,” he said.

Mahajan told PTI if there is any disagreement with the Finance Ministry, then it should be expressed at the RBI’s board meeting, not publicly. “This entire talk of central bank’s independence is a western concept,” he told PTI. “It is not acceptable and feasible here. India is a developing country, our main priority is employment and growth of small scale industries. The RBI should stand with government on these issues.”

The Centre has every right to use the powers of the RBI Act, Mahajan added.

On Wednesday, reports had claimed that the government had initiated talks with the central bank to invoke Section 7 of the Reserve Bank of India Act, which could empower it to issue directions to the central bank on certain matters. This was seen as an escalation of the tussle between the government and the RBI. In its statement, the Finance Ministry did not comment on the reports but said the autonomy of the central bank is an essential governance requirement.

“Both the government and the central bank have to be guided by public interest and requirements of the Indian economy,” the ministry said.

The widening rift

In his speech on Friday, Acharya said that governments that do not respect a central bank’s independence sooner or later incur the wrath of financial markets. Government officials had recently called for the RBI to relax lending restrictions on some banks. The RBI also opposed a suggestion by the government’s inter-ministerial committee to set up an independent regulator for payment systems.

Three days after the speech, Reuters reported that the Centre is upset with the central bank for publicly talking about the rift. Senior officials said the government fears the rift could tarnish the country’s image among investors. An unidentified official in the Prime Minister’s Office told Reuters it was “very unfortunate” that RBI took the matters public. The official said Patel may face a tough time when he appears before a parliamentary standing committee on November 12.

On Tuesday, Finance Minister Arun Jaitley said the central bank had “looked the other way” when banks were lending “indiscriminately” between 2008 and 2014. The government is also reportedly unhappy with the bank for not cutting interest rates and raising them instead.