Union Finance Minister Arun Jaitley on Sunday denied any 'disconnect' with the Reserve Bank of India (RBI) over plans to introduce a monetary policy committee and regarding the change in central bank's regulatory powers.
Jaitley said all the changes he proposed in the annual budget, which were being seen as a big shake up, had been discussed beforehand with the RBI.
"There has always been and shall continue to be regular continuous interaction between the central bank and the government. All issues which concern both our institutions are regularly discussed. We have complete free and frank discussions and therefore, there is no question of any 'disconnect' that's the word you use between the bank and the government. I have repeatedly clarified that," said Jaitley.
Meanwhile, RBI Governor Raghuram Rajan, said it was 'desirable' to establish a public debt management agency, one the government proposals seen as the biggest shake-up of financial regulation in a generation.
Rajan, cautiously backed the government plan to hand over public debt management to a new agency, as the two sides played down reports of friction over the biggest regulatory shakeup in a generation.
"I think a public debt management agency as a professional organisation independent of the central bank, independent of the government is something that is desirable because it puts some discipline on the government debt process and also frees regulation of the need to sort of create some sort of financial repression. Precise time, nature of resources it uses, how it works with the central bank and with the government, those are all details that a panel working to fill it out the things that have to be determined. So I think as a concept and enabling that concept it's a very worthwhile move," said Rajan.
Finance ministry sources said earlier this week that officials at the Reserve Bank of India had reservations about all the proposed changes.
