Skip to main content

RBI Autonomy — With Accountability

By
It is in the interest of the government and the nation to respect RBI’s functional autonomy, as happened at the last RBI board meeting. RBI autonomy came up when RBI governor Urjit Patel testified before Parliament’s standing committee on finance. It is important for all stakeholders to view and appreciate institutional autonomy in the right spirit. When the financial crisis struck in 2008, central bank autonomy, whether statutory or traditional, did not come in the way of governments, central banks and regulators of companies, insurance and stock markets working together to bail out banks, insurers and large companies, in several mature economies. Even when crisis is absent, the interconnected global economy, with its ability to send trillions of dollars of liquidity sloshing this unpredictable way or that, makes constant consultation and cooperation among the multiple nodes of fiscal and regulatory decision-making essential. 
India has a partially open capital account, and large amounts of foreign capital in the debt market. A perception that the government is forcing the central bank to suspend prudential norms for short-term gains would produce a flight of capital that would send yields spiking. The government has to be mindful of that, even if not of sentiment within the central bank or the financial community. That would mean leaving to the governor and his executive team all core regulatory decisions, such as how much liquidity the system needs, how much capital banks should have and how to nurse impaired banks back to health. The government should refrain from trying to transfer regulatory decisions from the RBI’s internal team to the executive board. The board can and should identify the concerns that RBI regulatory capacity should address, but not presume to tell RBI how to. The system of RBI testifying to a committee of parliament is healthy, as it brings greater accountability to both RBI and the government. Neither government spin nor RBI self-righteousness can deceive the markets as to autonomy’s well-being. That is a good thing.
The Economics Times, 29th November 2018

Comments

Post a Comment

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

By
  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6
Post a Comment
Read more

Jaitley plans to cut MSME tax rate to 25%

By
Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem
1 comment
Read more

Don't forget to verify your income tax return in August: Here's the process

By
  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s
Post a Comment
Read more