Former Reserve Bank of India Governor Raghuram Rajan on Monday said all Indians should be concerned about the reason for Urjit Patel’s resignation as the top bank’s chief. Patel resigned earlier in the day citing personal reasons. His tenure was slated to end in September 2019.
“I think this is the ultimate statement a regulator or a civil servant can make,” Rajan told ET Now. “I think his statement should be respected. We should go into the details on why there was an impasse which forced him to take this ultimate decision and I think this is something all Indians should be concerned about because the strength of our institution is really important.”
Rajan also said it was important to respect the central bank’s institutional capability and credibility. “At this point, it is important that the government recognises the statement made by Urjit Patel,” Rajan said.
Former Prime Minister Manmohan Singh said he learnt of Patel’s resignation “with great sadness”, according to ANI. “Dr Patel’s sudden resignation, at a time when the Indian economy is faced with many headwinds, is very unfortunate and is a severe blow to the nation’s economy,” Singh said in a press release. “There have been apprehensions expressed earlier by the Deputy Governor [Viral Acharya] of the RBI about the government’s intention to raid the capital reserves of the RBI for fiscal purposes,” he added. “I hope the resignation isn’t a sign that this may become a reality.”
Singh said it would be “foolhardy” to diminish the independence of institutions like the RBI for “short-term political gains”. The former prime minister said he hoped Patel’s resignation “isn’t a harbinger of the Modi government’s attempts to destroy institutional foundations of India’s economy”.
Patel is the first RBI governor since 1990 to step down from the post before the end of his term, BloombergQuint reported. Speculation over his resignation began last month after a rift between the Centre and the central bank became public.
Prime Minister Narendra Modi said the RBI brought financial stability under the leadership of Patel. “Dr Urjit Patel is an economist of a very high calibre with a deep and insightful understanding of macro-economic issues,” Modi said on Twitter. “He steered the banking system from chaos to order and ensured discipline.”
The prime minister praised Patel for being a thorough professional with “impeccable integrity”. “He has been in the Reserve Bank of India for about 6 years as deputy governor and governor. He leaves behind a great legacy. We will miss him immensely.”
Union Finance Minister Arun Jaitley said the government acknowledges the services rendered by Patel. “It was a pleasure for me to deal with him and benefit from his scholarship,” Jaitley said on Twitter.
Meanwhile, a spokesperson of the central bank refuted rumours that Deputy Governor Viral Acharya has also quit and said that Acahrya “does not intend to resign”, according to CNBC-TV 18.
RBI’s part-time director S Gurumurthy tweeted that he was surprised by Patel’s resignation. “The previous meeting was held in such cordial atmosphere that it comes as a shock,” he said. “All directors said media had created a wrong perception while inside it was totally different. That makes it even more surprising.”
The Congress said Patel’s resignation was a result of Modi’s assault on the democratic institutions. “Another one bites the dust,” Congress said on Twitter.
Senior Congress leader Ahmed Patel said the Bharatiya Janata Party has “unleashed a defacto financial emergency”. “The manner in which RBI governor has been forced to quit is a blot on India’s monetary and the banking system,” Patel said on Twitter. “The country’s reputation and credibility is now at stake. Every institution carefully built & nurtured over the last 70 years is being trampled upon with complete impunity.”
Congress President Rahul Gandhi, who was attending a meeting of Opposition parties in Delhi, said there was consensus among leaders in the room that the “BJP’s assault” on institutions like the Central Bureau of Investigation, Reserve Bank of India and Election Commission should be stopped, reported ANI. “The government’s attack on RBI’s autonomy led to RBI Governor Urjit Patel’s exit,” Gandhi said, according to CNBC-TV18.
Congress leader Kapil Sibal said the economy was suffering because of resignations, including Arvind Subramanian. “...Modi thinks that he’s the biggest economist and he doesn’t need them, so they are resigning,” ANI quoted Sibal as saying.
Former Union minister P Chidambaram said he was not surprised by Patel’s resignation. “No self respecting scholar or academic can work in this government,” he tweeted.
BJP leader Subramanian Swamy said Patel’s resignation was bad for the country’s economy, for the government and for the RBI. “He should at least stay till July, until the next government comes to power. The prime minister should call him and find out the reason and dissuade him from leaving in larger public interest,” Swamy said, according to ANI.