THe Blog

December 13, 2018

What’s behind the ‘potentially catastrophic’ fight at India’s central bank

Speaking to The Washington Post, Resident Senior Fellow Vivek Dehejia explains what Urjit Patel's resignation might mean for the declining health of Indian institutions.

 

"'We’ve seen this movie before in so many emerging economies,' said Vivek Dehejia, an economist and fellow at the IDFC Institute in Mumbai. 'There’s a central bank that’s trying to run a tight ship to keep things in check' and a government facing a reelection battle that wants to 'turn the spigots in every possible sense.'

 

The Modi government may succeed in its push to make the RBI a more pliable institution, Dehejia said, but the costs might be high. 'There could be short-term political gain for the government, but the long-term damage to the economy and its already weak institutions is going to be incalculable.'"

 

Read the full article here.

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