A trove of official documents obtained by The Reporters’ Collective reveals that a year after the Narendra Modi-led government came to power in 2014, it accused the Reserve Bank of India of setting interest rates high to benefit developed countries and sought a probe into it. This was first among a series of attempts by the government to nibble away RBI’s independence in setting the country’s monetary policy aimed at keeping prices low.
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The Modi government let Shaktikanta Das-led RBI evade accountability for breaching the inflation target, documents show. The govt gave the central bank a leeway by labelling its own inflation data spurious, ignoring statistics ministry’s objections.
Central banks have begun rolling back pandemic-year interest rates cuts that fueled inflation but the RBI hasn’t. While the RBI claims it needs low rates to spur growth, the central bank is helping the cash-starved government keep its borrowing cost low by not hiking the rates.
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