Bhartiya Janata Party (BJP) leader and Prime Minister of India Narendra Modi had called former Reserve Bank of India Governor, Urjit Patel a ‘snake who sits over a hoard of money’, according to former finance secretary Subhash Chandra Garg’s book ‘We Also Make Policy’.
Urjit Patel had resigned as the 24th Governor of Reserve Bank of India (RBI) in December 2018. Though he cited “personal reasons”, the resignation came amid reports of the rift between the RBI and the government. His was a rare case of a serving governor leaving his job midway through his three-year term.
Control over nationalized banks
The revelations come amid known friction between Patel and the PM Modi government that ultimately led to Patel’s resignation in 2018. In Garg’s book, he revealed that Modi government’s ‘frustration’ with Patel had grown as early as February 2018 and escalated a month later when he accused the government of its inability to shed regulatory authority over nationalized banks, which according to him left the RBI with inadequate regulatory authority over the public sector banks compared to private-sector banks.
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Modi-Urjit Patel friction over electoral bonds
Garg also alleged that Urjit Patel had tried to scuttle the Narendra Modi government’s Electoral Bond Scheme.
Garg mentioned that Patel attempted to do so by insisting that they should only be issued by the RBI and that too in digital mode.
In June that year, the then RBI boss raised repo rate to 6.25% citing a potential rise in inflationary pressures to the government’s decision to hike minimum support prices. Three months later, he raised the repo rate by 25%. As a result, pressure grew on the government to put additional capital in banks worth lakhs of crores.
Patel wanted to become most independent RBI governor: Garg
Increasing differences in economic policies between Urjit Patel, as the then RBI governor and later finance minister Arun Jaitley surfaced during a meeting convened by PM Modi on 14 September 2018, according to Garg’s book.
Patel gave a presentation in which he gave some solutions including the scrapping of long-term capital gains tax, scaling up disinvestment targets, approaching multilateral institutions asking them to invest in government of India bonds and paying up the pending bills of several companies.
In his book, Garg claimed that Jaitley out of frustration called Urjit Patel’s solutions as ‘totally impractical and generally undesirable’.
‘Snake who sits over a hoard of money’
Arun Jaitley vs Urjit Patel
Garg’s book reveals that the presentation worsened the relations between the Finance Ministry and the RBI. The ex-finance secretary claimed Patel’s communication lines with Jaitley and then officiating finance minister had broken down, and the only communication took place through then additional principal secretary PK Mishra in the Prime Minister’s Office (PMO).
PM Modi lost his cool on ex-RBI Guv Urjit Patel
Stating that Prime Minister Narendra Modi was ‘sick of the situation’ as he had listened to Patel’s presentations carefully and patiently.
An angry PM Modi attacked Urjit Patel on RBI’s stand on the resolution of non-performing assets and its “intransigent, impractical and inflexible attitude to finding solutions”, Garg’s book revealed.
The book further says that PM Modi slammed the governor for proposing the withdrawal of the Long-term capital gains (LTCG) tax, which had since stabilized with hardly anyone objecting to it, and asking for fiscal deficits to be cut down further in the middle of the financial year.
The prime minister, Garg added, compared Urjit Patel to the “snake who sits over a hoard of money, for being unreceptive to putting RBI’s accumulated reserves to any use”.
(The book excerpts were published in a report by Hindustan Times)
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