The Centre for Corporate Governance and Citizenship (CCGC) at IIMB hosted a panel discussion on Independent monetary policy and a separate debt management policy for India on July 4, 2018. The discussion is current and topical because of the increasing globalization across the world. This results in a need to create an independent monetary policy and separate debt management from the Reserve Bank of India. The panel was composed of Dr. S.S. Bhalla, a member of the Prime Minister’s Economic Advisory Council, Mr. B.K. Bhattacharya (IAS), the former Chief Secretary of the Government of Karnataka and Professor Narendra Pani from the National Institute of Advanced Studies.
Manoj Chakravarti, Chief Operations Officer, Centre for Corporate Governance and Citizenship (CCGC), IIM Bangalore, welcomes the panellists and audience to a discussion on ‘Independent Monetary Policy and a Separate Debt Management Policy for India’, organized by CCGC, as part of its Leaderspeak Dialogue Series, on July 04, 2018.
Dr. Bhalla set the tone for the discussion by speaking about how the central bank should not control debt management. It makes no sense because “if the central bank does debt management, it is doing the crime, policing, judgement and execution. It is setting interest rates and setting up the debt management strategy.” He pointed out that there are 14 reports stating that the debt management office should be independent of the central bank. This was in fact proposed by many of the previous governors of the Reserve Bank of India prior to them becoming the governor. However, as soon as they became RBI governors, they asked for the switched positions and supported that both functions be controlled by the RBI. He concluded by asking the audience to question why the debt management office is in the RBI when many of its own proponents asked for it to be independent.
Prof. S Raghunath, Chair, Centre for Corporate Governance and Citizenship, IIMB, welcomes the panel.
The next speaker was Mr. Bhattacharya. He spoke about the macro impact of debt, the macro sustainability of debt and issues relating to size of debt. He spoke about how it impacts monetary policy and how the combination of monetary policy and fiscal policy have an impact on macro policies.
(L-R) Mr. B.K. Bhattacharya (IAS), former Chief Secretary, Government of Karnataka, Prof. Narendra Pani, National Institute of Advanced Studies, Dr. S.S. Bhalla, Member of the Prime Minister’s Economic Advisory Council, and Prof. S Raghunath at the panel discussion on ‘Independent Monetary Policy and a Separate Debt Management Policy for India’, on July 04.
The next speaker was Professor Narendra Pani. He began by answering the question posed by Dr. Bhalla. He believes that the formulation of policies in India is done in an engineering fashion – existing characteristics of the economy can be wiped out and new policies simply imposed on a clean slate. He believes that the idea of an independent monetary policy is fundamentally flawed because it only works in an ideal situation and any talk of independent monetary policy must be tempered.
A snapshot of the Q&A session after the panel discussion.
This part of the Leaderspeak series, hosted by CCGC, ended with the audience asking insightful questions into the speakers’ thoughts about various issues related to debt management and independent monetary policy in India. The panel was moderated by the Chair of the CCGC, Professor S. Raghunath.
A section of the audience at the discussion.
