Finance Minister Arun Jaitely has said while enjoying functional autonomy, a regulator cannot be ‘isolationist’ and has to consult all stakeholders, merely days after Urjit Patel’s resignation as governor of RBI.
Without mentioning the government invoking the never-before-used controversial Section 7 of the RBI Act, he said government used ‘every instrument available to our advantage to force a discussion with RBI’ on the issues of liquidity and credit.
He claimed that there was never a breakdown in the relationship between RBI and government, and that pleasant meetings were held regularly on the differences at all levels, including with the Prime Minister Narendra Modi.
Without specifying RBI, he said there is a need for regulators to consult all the stakeholders as that is when one gets a ‘feel of the market’. One cannot say that one reads the books, data and research papers before forming opinions, he said.
“The empirical situation in the market will be entirely different, unless you consult stakeholders,” he said, adding there is a fair chance of a regulator going wrong on a subject because of the isolationist attitude.