Wednesday, October 27, 2021

Nehru, Indira, PC all had issues with RBI governors, says Jaitley

Finance Minister Arun Jaitley was forthright and open on some of the most contentious and current is..

By admin , in Markets , at December 13, 2018

Finance Minister Arun Jaitley was forthright and open on some of the most contentious and current issues during an interaction with Navika Kumar of TimesNow at the India Economy Conclave in Mumbai through a video link on Thursday. Edited excerpts:

Navika Kumar: With these poll results, is the path followed by your government going to change in terms of reforms?

Arun Jaitley: A lot of reforms take place through larger consensus. On the eve of elections in India, consensus is not that easy. I certainly do not agree with you when you used the term freebies. Rural India has to be helped. If they have to be helped in terms of resources, how do we do it?

Governments in the past have given them a lot of slogans. I just checked the figures. Have they really lived up to it? Barring one or two, state governments have failed to deliver on the promises because of their fiscal position. On the contrary, I can count the facilities given by the Centre to rural people. But none of them is going to be a dole, or a freebie. It's the utilisation of resources for poverty eradication.

Let's look at financial inclusion. We made sure they are connected to banks, get low cost insurance policies, low interest Mudra loans. 13 crore people got that. 33 crore people got connected to bank accounts. Look at their life in rural areas. We have made sure every village gets a road. We tripled investment on rural roads. Under Grameen Awas Yojna, we are making 50 lakh houses in rural areas every year to give the same to the weakest sections of population. By 2022, at this pace, every poor in villages will get a regular house. We make sure all villages get electricity.

When Prime Minister announced Swachh Bharat, rural sanitation was 39 per cent. Today, it's in excess of 96 per cent. Out of 8 crore poor houses, 6 crore already have cooking gas connections; 10 crore poorest households get hospital treatment free in India.

These are not doles and freebies. These are effective poverty eradication steps, which are adding to the quality of life in rural areas. This is sound policy as against populism. These are popular programmes based on sound policies. If we continue on this path and keep investing in rural areas, we will pull up the life of the people in rural areas and bring it to as close as we can to an urban quality.

What do you put down BJP's poll defeat in three heartland states of Rajasthan, Chhattisgarh and Madhya Pradesh to? All these schemes were there as well. Didnt they go across to voters?

At times, victories and defeats are always exaggerated. Look at Madhya Pradesh. It was a BIMARU state when BJP came to power in 2003. Then issues were basic, like bijli, sadak, pani; BSP as they call them. In MP, agriculture didn't have water and electricity. It was the worst state in terms of roads.

15 years later, we transformed Madhya Pradesh. We pulled it out of BIMARU tag. It's one of the fastest growing states. Its growth on other parameters is unprecedented. I firmly maintain that we did exceedingly well in MP. It's almost a dead heat. We narrowly missed it even though our vote percentage is higher. This can be on account of fatigue factor, certain caste equations, misunderstanding of steps taken by the government and candidate level anti-incumbency. Please dont equate marginal defeats with rejection of policies.

In Rajasthan, we were told we are going to be routed. Before this election, we were in power four times out of six. We came within 0.5 per cent of a popular vote. There were several factors.

So, we are not at a position where we require a whole change in our policies. Ours is high-growth and pro-poor policy. This policy is sound for states and the country. Otherwise, you will end up in a populist situation. Take the test case of Punjab. You made announcements. You were caught between two stools. You couldnt deliver on promises. Because of populism, you are not able to spend any money on development. Capex in Punjab has hit rock bottom. This is populism as against sound policy.

The other accusation against your government is destruction of institutions. Let me bring up the recent resignation of RBI Governor Urjit Patel. Some days ago, you had said the government would not get into confrontation with RBI. Did Patel resign due to confrontation? The opposition says you have chosen one as a rubber stamp as a replacement.

Let me make a serious objection to the comment you have made about the new governor. In fact, you are holding the institution in disgrace, not us. You should restrain from using such term for a past or present governor.

RBI is an important institution of this country, an institution of great credibility. Its autonomy does exist within the framework of law. Its independence has to be respected because it has benefited the country. Now, having a different opinion is not confrontation.

I think Indian media in hyper-journalism converts two conflicting opinions as an area of confrontation. If you look at RBI history, there are several instances where the governments had a different view from what RBI had. Then, either those differences are settled or the governor makes way.

We had our opinion on 2-3 major issues. The immediate issue was credit and liquidity in the market. Every person in the financial sector was talking about the liquidity issue. We are the sovereign government. We are the most important stakeholder in managing our economy. So, how is this discussion destruction of an institution? After all, RBI is responsible for liquidity and credit in the system. We are not taking over that function.

We found this problem very real. We felt RBI must address this concern. How is it an issue of confrontation? If the government is not able to convey the difficulties, then it will be failing in its responsibilities.

Don't forget what Pandit Nehru had written to the then RBI governor. The economic policy of the country is determined by the elected government. RBI's monetary policies are autonomous and independent. Other policies of RBI have to be in tandem with the economic policy of the country.

So, autonomous institutions must be informed that there are difficulties and they should be corrected. Please dont give it a hype and call it destruction of institutions. If you call it so, then it will be called — as author put it — dialogue of the deaf, because you then won't be addressing the concerns to each other. In life, concerns of the economy have to be addressed and communicated.

Let me tell you, CD Deshmukh came from IAS. Benegal Rama Rau was from civil service, like several others. YV Reddy and Subbarao were IAS officers. If you call an officer with 35 years of economic management a rubber stamp, then Indian media is causing more damage than anybody else in the system.

That was the word used by the Opposition. What would be your response to Rahul Gandhi?

PM Nehru had asked the governor to resign. Indira Gandhi had asked the then governor to resign. You had Yashwant Sinha who had asked RN Malhotra to resign. Chidambaram was not on speaking terms with two governors. I have worked with two governors and I have best relationships with them even though I may not have agreed with them on many issues.

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