{"id":158,"date":"2019-02-02T01:18:25","date_gmt":"2019-02-02T01:18:25","guid":{"rendered":"http:\/\/populareducation.in\/loksamvad\/?post_type=article&p=158"},"modified":"2019-02-02T01:18:25","modified_gmt":"2019-02-02T01:18:25","slug":"the-curious-exit-of-modia-blue-eyed-boy","status":"publish","type":"article","link":"http:\/\/populareducation.in\/loksamvad\/article\/the-curious-exit-of-modia-blue-eyed-boy\/","title":{"rendered":"The Curious Exit of Modi\u2019a Blue-Eyed Boy"},"content":{"rendered":"Urjit Patel\u2019s stunning move on Dec. 10 to resign as the 24th governor of the Reserve Bank of India (RBI) has sparked another bout of uncertainty in India\u2019s economy and political landscape.\r\n\r\nThe move, coming around nine months ahead of when his term was set to end, is a culmination of months of acrimony with the government that played out in the public eye.\r\n\r\nThe Narendra Modi government\u2019s priority at the moment would be to find a replacement for Patel, who quit just days ahead of the next central bank board meeting scheduled for Dec. 14. It is likely that the government may appoint someone to take charge before that. There is speculation that NS Vishwanathan, the RBI\u2019s senior-most deputy governor may take interim charge.\r\n\r\nMeanwhile, Patel\u2019s stint at the RBI is noteworthy.\r\n\r\nFor one, he was hand-picked by the Modi government and viewed as its \u201cyes man.\u201d And yet, Patel served the shortest tenure as an RBI governor since 1992.\r\n\r\nHere\u2019s a look at the highs and lows of Patel\u2019s time at India\u2019s central bank:\r\n\r\nSeptember 2016: Takes charge as RBI governor on Sept. 04, succeeding Raghuram Rajan who isn\u2019t offered a second term by the government. Modi faces a severe backlash.\r\n\r\nNovember 2016: On Nov. 08, the government stuns India by rendering two-high value currency notes illegal. This sparks a cash shortage in the country. Banks forced to work round-the-clock to ensure cash supply. Nearly 70 people, including overworked bank officials, reportedly die due to causes directly or indirectly related to demonetisation. Printing of new notes drains the RBIs coffers.\r\n\r\nJune 2017: In a bi-monthly meeting of the RBI, Patel reveals that the monetary policy committee (MPC) has refused to meet finance ministry officials ahead of the MPC meet. It was believed that the government had called for a meeting to wield its influence on the MPC to reduce interest rates to boost lending.\r\n\r\nAugust 2017: The RBI pays only Rs30,659 crore ($4.23 billion) as dividend to the government, less than half of what was paid the previous year.\r\n\r\nFebruary 2018: The RBI comes up with stringent bad-loan reporting norms as a result of which several banks are put under the prompt corrective action (PCA) plan.\r\n\r\nThe biggest-ever banking scam in India is reported by state-owned Punjab National Bank (PNB) which has been defrauded of nearly $2 billion. Later that month, finance minister Arun Jaitley blames the RBI for being less vigilant.\r\n\r\nMarch 2018: After a month-long silence on the scam, Patel finally passes the buck to the government and blames it for giving the RBI limited power over public sector banks such as PNB. The government denounces the RBI\u2019s comments and says it has enough powers.\r\n\r\nApril 2018: The RBI puts 11 of the 21 government-owned banks under PCA. In order to improve their financial health, there are several restrictions placed on these lenders, including on lending, hiring, and expansion. This later becomes a bone of contention between the government and the RBI.\r\n\r\nAugust 2018: The government appoints chartered accountant S Gurumurthy and cooperative banker Satish Marathe to the RBI\u2019s central board as independent directors. Gurumurthy has been a vocal critic of some of RBI\u2019s moves under Patel.\r\n\r\nOctober 2018: The government appoints retired bureaucrat Revathy Iyer and Sachin Chaturvedi, head of a Delhi-based think tank, to the RBI board. It removes Nachiket Mor, an old RBI hand, from the board.\r\n\r\nOn Oct. 19, the central bank puts out a strongly-worded dissent note on its website against the government\u2019s suggestions for setting up an independent payments regulator.\r\n\r\nOn Oct. 26, Viral Acharya, deputy governor of the RBI, makes an extremely charged speech and warns that undermining the RBI\u2019s independence can be \u201cpotentially catastrophic.\u201d\r\n\r\nOn Oct. 30, the government blames the RBI for not checking the banks against indiscriminate lending, which led to a bad loan crisis.\r\n\r\nMeanwhile, in the last week of October, several media reports appear stating that the government is considering invoking section 7 of the RBI Act, an unprecedented move. The section allows the government to give directions to the RBI on certain matters.\r\n\r\nNovember 2018: Subhash Chandra Garg, the economic affairs secretary, takes a shot at Acharya and the RBI. In his speech, Acharya had mentioned that governments that do not respect the autonomy of the central bank may incur the \u201cwrath of the markets.\u201d\r\n\r\nOn Nov. 19, after a nine-hour-long meeting the RBI and the government signal that all is well now. The RBI also issues a statement, which details out some of the issues that were discussed and the steps that the two parties have jointly agreed on.\r\n\r\nDecember 2018: In its bi-monthly policy meeting on Dec. 05, Patel refuses to address any questions from the media on the friction between the RBI and the government.\r\n\r\nOn Dec. 10, Patel steps down from his post with immediate effect citing personal reasons.","protected":false},"excerpt":{"rendered":"

Urjit Patel\u2019s stunning move on Dec. 10 to resign as the 24th governor of the Reserve Bank of India (RBI) has sparked another bout of uncertainty in India\u2019s economy and political landscape. The move, coming around nine months ahead of…<\/p>\n","protected":false},"author":1,"featured_media":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_themeisle_gutenberg_block_has_review":false,"footnotes":""},"categories":[],"tags":[],"issuem_issue":[6],"class_list":["post-158","article","type-article","status-publish","format-standard","hentry","issuem_issue-december-2018","entry","no-media"],"yoast_head":"\nThe Curious Exit of Modi\u2019a Blue-Eyed Boy - Lok Samvad<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"http:\/\/populareducation.in\/loksamvad\/article\/the-curious-exit-of-modia-blue-eyed-boy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Curious Exit of Modi\u2019a Blue-Eyed Boy - Lok Samvad\" \/>\n<meta property=\"og:description\" content=\"Urjit Patel\u2019s stunning move on Dec. 10 to resign as the 24th governor of the Reserve Bank of India (RBI) has sparked another bout of uncertainty in India\u2019s economy and political landscape. 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