THe Blog

November 05, 2018

India’s central bank faces a major test of its independence

This Economist article quotes Resident Senior Fellow Vivek Dehejia. Excerpts:

 

"If Mr Patel is forced out, it will be an “incalculable disaster”, says Vivek Dehejia of the idfc Institute, a think-tank in Mumbai. For his replacement, “they’d be sure to appoint essentially a stooge”. Confidence in the rupee would crumble; that in turn could cause inflation to shoot up. Having granted the central bank independence, India’s government would have undermined it for short-term gain—precisely the risk that Mr Acharya warned against."

 

Read the full article here.

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