The relationship between RBI and govt is at its best

Outgoing Reserve Bank of India Governor SHAKTIKANTA DAS talks of how the relationship between the central bank and the government has evolved, why putting business restrictions is the last resort for the regulator, and that growth is impacted by a multiplicity of factors, not just one factor of the repo rate. Edited excerpts:

- SHAKTIKANTA DAS

When you moved to the Reserve Bank of India (RBI), there were concerns about the divide between North Block and Mint Street. As you sign off today (on Tuesday), how do you see this relationship and what has been your experience about it?

The relationship is at its best. We had excellent cooperation and coordination before, during, and after Covid, the multiple challenges which we faced when prices spiked following the start of the war in Ukraine. The government took a lot of supply-side measures, which helped the RBI to check inflation. The same level of coordination continues.

Do you think the role of the central bank has strengthened now under the MPC (Monetary Policy Committee) framework and with a consultative approach to regulation?

Certainly – the consultative approach to regulation, the flexible inflation-targeting framework, and the Bimal Jalan committee, which was jointly set up with the government (helped in this). A selection of members was jointly done by the government, the finance ministry and the RBI. It was constituted immediately after I took over at the RBI. I think many things have been institutionalised and as the economy grows, the economy is also getting formalised.