S Gurumurthy, a director at the Reserve Bank of India, on Thursday said the standoff between the central bank and the government is “not a happy thing”. The statement came days before a crucial meeting of the RBI board on November 19 amid speculation of a rift between the bank and government.

Gurumurthy, co-convener of the Rashtriya Swayamsevak Sangh economic wing called Swadeshi Jagaran Manch, was appointed to the central bank board in August. He was speaking at an event at New Delhi-based think-tank Vivekananda International Foundation, of which he is the chairman.

During his speech, he also claimed that the Indian economy would have collapsed if the government had not demonetised high-value currency notes in 2016, reported BloombergQuint. He defended the goods and services tax as well, and said that while demonetisation was corrective in nature, the new indirect tax system was reformative.

Gurumurthy added that globalisation was a thing of the past, and the World Trade Organization was “in the ICU [intensive care unit]”, according to CNBC-TV18.


The standoff

On October 26, RBI Deputy Governor Viral Acharya had said governments that do not respect a central bank’s independence sooner or later incur the wrath of financial markets. Three days later, Reuters reported that the Centre was upset with the RBI for publicly talking about the rift.

On November 9, Economic Affairs Secretary Subhash Chandra Garg dismissed a news report that suggested the government had sought Rs 3.6 lakh crore from the central bank’s reserves.

In an interview to CNBC-TV18 earlier this month, former Reserve Bank of India Governor Raghuram Rajan said the rift can be resolved if both sides respect each other’s intent and autonomy.