Government plays T20, RBI plays Test match: Deputy Governor bats for independence

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New Delhi: Reserve Bank of India's Deputy Governor Viral Acharya on Friday made use of cricket to explain why the central bank ought not to be interfered with and how its playing field is differernt from that of governments.

Acharya said that markets have the ability to discipline governments which play T20 cricket while RBI has a long-term outlook and plays Test cricket. "When governance of the central bank is undermined, it is unlikely to attract or be able to retain the brightest minds that thrive on the ability to debate freely, think independently, and effect change," he said. "Attrition of central bank powers results in attrition of its human capital and deterioration of its efficiency and expertise over time."

Highlighting why the central bank's independence must not be eroded, Acharya warned of severe consequences of interference. "Governments that do not respect central bank's independence will sooner or later incur the wrath of the financial markets, ignite an economic fire and come to rue the day they undermined an important regulatory institution," he said.

Acharya's hard-hitting speech at AD Shroff Memorial Lecture, Mumbai has come amid a tug of war between going on between the RBI and the government over a range of issues especially in the context of the banking crisis.