Breaking the umbilical cord- Is it necessary for the Indian Government?

The economic systems that we see today have come a long way. The mechanism through which they are governed now has evolved over a period of time, after all, who says evolution is only for the life on earth? It applies to the whole of the universe.

Earlier when the land was ruled by the kings, a very basic form of an economic system existed. There were markets in those days as well but the goods and services produced and sold were limited, making it easier to be regulated. So there were a few economic advisers and accountants who assisted the crowned in making the economic policies, but the final word would always be the ruler.

But it is history now. Today we can evidently see that the Indian economy has undergone metamorphose. After 69 years of democracy, the financial system of the nation has become more complex as the gates have been opened for the foreign markets and investments, making the macroeconomic environment swell up with opportunities. Also, unlike the bygone times, we elect our representatives today who have the responsibility to ensure the smooth functioning of the nation.

But we do not elect rulers to think for us; they only create institutions and procedures which permit rulers to take decisions when there are different opinions. But more often politicians end up thinking electoral victory as a vote for their wisdom. But even in a democracy, a majority vote is the last resort. Democratic institutions are mechanisms of consultation and debate; they are intended to give voice to reason.

But now it looks as if the voice has been silenced. There have been many instances recently which demonstrate this point. Taking the burning example of — The Reserve Bank of India, the central bank of the nation, has to take directions from the government but holds the authority to make monetary decisions. Likewise, the RBI governors have the power to control the flow of money, inflation and the other economic problems in the nation by way of monetary policies like interest rates. But on many occasions, it has been observed that until now the governors of the apex bank are too subservient to the ministries. Finance ministers are amateurs in the field and take some time to learn the nitty-gritty of the field by which time they may get voted out. After which a new government may step in with different agendas, objectives and plans for the nation and the compliant administrators may have to reroute their plans. This vicious circle sometimes causes irreversible damage to the financial system and also make the economy and its currency very unstable.

But when Academician Mr Raghuram Rajan retreated from Michigan to the Mint Road in Mumbai, things seemed to change. This new governor of the central bank came in with an attitude of “I do what I do” and has been bold enough to express his opinion on diverse topics like intolerance, rigging the data etc. without sugar coating them. But it did not go down very well with the ruling party. He stayed glued to his plan of curbing the inflation first and then talking about growth even after continuous pressure from the NDA government who wanted it the other way.

The conflict between the ones who believe in finding knowledge in the Hindu scriptures and the one who placed his bets on the foreign economic policy kept on increasing. And finally one fine day the news of him stepping down as the governor took the world by frenzy.

This coming in at a time where Kanhaiya Kumar and Rohit Vemula are trending, just resurfaced the fact that the interference of government in sectors like academics and functioning of bodies like RBI is increasing. And so probably the time has come for the government to cut the umbilical cord and let them grow and flourish themselves under their watchful eye.

Democracy is when people keep the Government in check.

What do you guys feel about it? Please share your views in the comments section!