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India's Central Bank Governor Resigns Amid Feud With Gov't

© AFP 2023 / JUSTIN TALLISIndian Prime Minister Narendra Modi stands during a welcome ceremony outside the Treasury in London on November 12, 2015 on the first day of a three-day visit to Britain.
Indian Prime Minister Narendra Modi stands during a welcome ceremony outside the Treasury in London on November 12, 2015 on the first day of a three-day visit to Britain. - Sputnik International
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The unprecedented public face-off between the Indian government and the country’s central bank Governor Urjit Patel, who was appointed by the Narendra Modi government itself, has resulted in the unceremonious exit of Patel ten months before the expiry of his three-year term.

After a prolonged tussle with the government on a range of issues including autonomy and use of sovereign reserves, Urjit Patel, Chief of India's banking regulatory body, the Reserve Bank of India (RBI) resigned on Monday.

"On account of personal reasons, I have decided to step down from my current position effective immediately," Patel said in his resignation letter which was forwarded to the media also.

Patel's predecessor Raghuram Rajan, whose exit from RBI was also much controversial owing to his open criticism of Modi government's handling of sensitive issues, reportedly tweeted within minutes of Patel's exit saying that "all Indians should be concerned about Governor Patel's resignation."

To control the damage, Prime Minister Narendra Modi and Finance Minister Arun Jaitley took to Twitter to appreciate Patel and his tenure. Modi said, "Patel leaves behind a legacy."

A man displays 500 Indian rupee notes during a rally organised by India’s main opposition Congress party against the government's decision to withdraw 500 and 1000 Indian rupee banknotes from circulation, in Ajmer, India, November 24, 2016. - Sputnik International
Reserve Bank of India Deputy Governor Defends Central Bank Independence
The RBI and the government have been at loggerheads for the last two months on the autonomy of the banking regulator and on the modalities on use of excess reserves of the RBI. The Modi government wanted to release the excess reserves to use up for measures and policies ahead of the election year. Modi government is running for a re-election to the Parliament polling for which is expected any time in March-April 2019.

In November, the board of RBI held a marathon meeting for nine hours and the press release after the deliberation ironically said that it ended in a "conciliatory note." 

Several senior observers and commentators have expressed concern over the development.

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