In the investigative series on India’s monetary policy, The Collective found evidence of Modi government’s attempts at making inroads into the RBI and nibble away its independence in setting the country’s monetary policy, which primarily aims to keep prices stable. The series spotlights how the same government that brought in the independent monetary policy framework defeated its key goals of transparency and accountability.
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.
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.