Meeting on September 14, 2018
On September 14, 2018, Prime Minister Narendra Modi convened a meeting to review the state of the economy amid a difficult economic situation and considerable strain between the government and the Reserve Bank of India. The meeting was attended by RBI Governor Urjit Patel, Finance Minister Arun Jaitley, Principal Secretary Nripendra Misra, Railways Minister Piyush Goyal, Additional Principal Secretary P.K. Mishra, DFS Secretary Rajiv Kumar, and two deputy governors of RBI, Viral Acharya and N.S. Vishwanathan.
Patel made a presentation in which he painted a bleak picture of the economy and offered recommendations that the government could take. However, Garg claims that Patel’s recommendations were not meaningful enough to address the economic situation and resolve the differences with the government.
Modi Loses His Cool
Modi was reportedly not impressed with Patel’s presentation and became angry. He compared Patel to a “snake who sits over a hoard of money” for being unreceptive to putting the RBI’s accumulated reserves to any use. Modi also brought up many other issues where he felt that the RBI was not cooperating with the government.
Patel eventually resigned as the RBI Governor on December 10, 2018, over policy differences with the government.
All this information is written in the recent book published by former Finance Secretary Subhash Chandra Garg. Garg also writes about other contentious issues between the RBI and the government, such as the surplus transfer of the RBI and the February 12 circular, which created difficulty for banks with regard to loans given to power-sector companies.
Garg’s book provides a glimpse into the circumstances that preceded Patel’s resignation as RBI Governor. It is a controversial book, but it offers a unique perspective on the events that led to Patel’s departure.