India's Central Bank Governor Resigns Amid Feud With Gov't

The unprecedented public face-off between the Indian government and the country’s central bank Governor Urjit Patel, who was appointed by the Narendra Modi government itself, has resulted in the unceremonious exit of Patel ten months before the expiry of his three-year term.

After a prolonged tussle with the government on a range of issues including autonomy and use of sovereign reserves, Urjit Patel, Chief of India's banking regulatory body, the Reserve Bank of India (RBI) resigned on Monday.

"On account of personal reasons, I have decided to step down from my current position effective immediately," Patel said in his resignation letter which was forwarded to the media also.

"Effective immediately": Urjit Patel statement on stepping down as RBI governor

Read here: https://t.co/3Jgr9rk0Ik#UrjitPatel #RBI pic.twitter.com/30F58VGDLI

— NDTV (@ndtv) December 10, 2018

Patel's predecessor Raghuram Rajan, whose exit from RBI was also much controversial owing to his open criticism of Modi government's handling of sensitive issues, reportedly tweeted within minutes of Patel's exit saying that "all Indians should be concerned about Governor Patel's resignation."

LIVE | Reacting upon the resignation, Patel’s predecessor Raghuram Rajan said, “All Indians should be concerned about Governor Patel's resignation.”
Follow for updates: https://t.co/qISNKh2RA4

— The Quint (@TheQuint) December 10, 2018

To control the damage, Prime Minister Narendra Modi and Finance Minister Arun Jaitley took to Twitter to appreciate Patel and his tenure. Modi said, "Patel leaves behind a legacy."

Dr. Urjit Patel is a thorough professional with impeccable integrity. He has been in the Reserve Bank of India for about 6 years as Deputy Governor and Governor. He leaves behind a great legacy. We will miss him immensely.

— Narendra Modi (@narendramodi) December 10, 2018

The Government acknowledges with deep sense of appreciation the services rendered by Dr. Urjit Patel to this country both in his capacity as the Governor and the Deputy Governor of The RBI. It was a pleasure for me to deal with him and benefit from his scholarship. (1/2)

— Arun Jaitley (@arunjaitley) December 10, 2018

The RBI and the government have been at loggerheads for the last two months on the autonomy of the banking regulator and on the modalities on use of excess reserves of the RBI. The Modi government wanted to release the excess reserves to use up for measures and policies ahead of the election year. Modi government is running for a re-election to the Parliament polling for which is expected any time in March-April 2019.

In November, the board of RBI held a marathon meeting for nine hours and the press release after the deliberation ironically said that it ended in a "conciliatory note." 

Several senior observers and commentators have expressed concern over the development.

Subramanian Swamy on Urjit Patel's resignation as RBI Guv: His resignation will be bad for our economy, RBI & govt. He should at least stay till July, until the next govt comes to power. PM should call him & find out the reason&dissuade him from leaving in larger public interest pic.twitter.com/HutGRuuiob

— ANI (@ANI) December 10, 2018

Urjit Patel has displayed a quality so rare among those holding public office: willingness to take risk & make personal sacrifice to protect his institution’s autonomy and own professional reputation. It’s an honourable and patriotic act. RBI so needed a leader to fight back..

— Shekhar Gupta (@ShekharGupta) December 10, 2018