Now that the debate on the reformation of financial sector architecture has been temporarily laid to rest, it is possibly not a bad idea to examine some of the ideas for what they are. It has to be acknowledged that the debt and monetary management roles of the Reserve Bank of India have elements of conflict embedded. But what about conflict in the Ministry of Finance as owners of banks in managing debt to which banks are primary subscribers. The model of an independent debt management agency has been copied from countries with minimal ownership role of the government in the financial sector. In fact, if the Life Insurance Corporation's role in government divestment is any indication, the conflict isn't really a theoretical construct. There might, of course, be a case of a debt management agency under the finance ministry even after considering this conflict. But the Financial Sector Legislative Reforms Commission (FSLRC) didn't even consider it.
Moreover, under what circumstances, is the transfer of power of non-debt creating foreign exchange inflows a reform measure?
Under the FSLRC's own recommendation, such entity-specific measures, if with the Reserve Bank of India, are subject to appeal, whereas the finance ministry is strictly outside the purview of such appellate authority. What about paeans to appeal in a liberal democracy?
In fact, the utter naivety and double standards of some of the presumptive authors of the FSLRC are so apparent that it is very difficult to treat the FSLRC as nothing but a hatchet job.
Indranil Chakraborty Mumbai
Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number
