Question

Independence of RBI has been a major subject of debate in India of late. A few
Governors resigned on this issue, as there was too much interference from the
government in deciding the policies of RBI. Do you agree/disagree on the question of
RBI deciding its own course of action while formulating macroeconomic policy of
country or should it listen to its political masters?

Answer 1

Answer:

Yes

Explanation:

Answer 2

RBI or Reserve Bank of India is the epitome of the banking sector in India. It is behind regulating all the banking-related activities. If there are frequent interventions of government in the matters of RBI,

• the chances of mismanagement rise as RBI is the central bank formulating the policies of various banks
• this in return can lead to clashes in ideologies
• if the central bank runs according to the government it could even result to red tapism