Many people have tended to read into the Reserve Bank of India’s statement that demonetisation of Rs 500 and Rs 1,000 notes had been suggested to it by the government of India implications that probably are not warranted.
The central bank has lost its autonomy and credibility affected, say some, including former Reserve Bank of India governor Yaga Venugopal Reddy. If the assumption is that the central bank should have resisted the move to demonetise high-denomination notes, that assumption is misplaced.
The Reserve Bank of India or any other central bank had the duty to carry out the will of the sovereign, as articulated by the duly elected government of the day. Its job is to carry out that mandate well, planning and implementing its execution in an optimal fashion. In the democratic system of government, the people are the sovereign and Parliament their representative forum. Parliamentary majority throws up the political leadership of the executive.
The Reserve Bank of India or any other central bank had the duty to carry out the will of the sovereign, as articulated by the duly elected government of the day.
As a political leadership that enjoys the confidence of the elected people’s representative forum, it has the authority of the people to take decisions in their welfare and on their behalf. If the political leadership makes mistakes in their choice of action and policy, the people will punish them.
The government’s accountability is to the people. If the government of the day thinks certain currencies have to be demonetised, it is not for an institution with a narrowly defined mandate to thwart that policy choice.
This does not mean that the government can take decisions that violate the laws of the land: the courts would step in, if laws are violated. That being the case, the questions to be asked are different.
Did the central bank advise the government as to how to go about demonetising two widely used notes in the least disruptive fashion?
Did it devise a plan of action that was optimal? Did it manage execution of the plan efficiently and coherently? All these questions can be answered only in the negative.
So, it is inevitable that the Reserve Bank of India will face some flak. But it was not its job to have resisted demonetisation.
SOURCE: THE ECONOMICS TIME
IMPORTANT WORDS FROM ARTICLE & THEIR MEANING
1. Implications (noun) (निहितार्थ) – the conclusion that can be drawn from something although it is not explicitly stated
Synonyms – ramification, conclusion
Antonyms – measurement, reality
Ex: The implication was as obvious as it was annoying.
2. Autonomy (noun) (स्वायत्तता)– the right or condition of self-government
Synonyms – freedom, liberty
Antonyms – dependence
Ex: A good boss will provide her workers with the autonomy necessary to create their own ideal working conditions.
3. Resisted (verb) (विरोध)– withstand the action or effect of
Synonyms – withstand, refuse
Antonyms – allow, assist
Ex: He strongly resisted.
4. Sovereign (noun) (सम्राट)– a supreme ruler, especially a monarch
Synonyms – absolute, autonomous
Antonyms – restricted, dependent
Ex: While a few people believe Mexico is a part of the United States, it is actually a sovereign country with its own government.
5. Articulated (adjective) (व्यक्त) – having two or more sections connected by a flexible joint
Synonyms – vocalize, express
Antonyms – ask, listen
Ex: The interviewer asked me to articulate my potential contributions to the company.
6. Mandate (noun) (शासनादेश)– an official order or commission to do something
Synonyms – sanction, dictate
Antonyms – breach, denial
Ex: Does the mandate allow police officers to carry their weapons aboard commercial airplanes?
7. Thwart (verb) (विफल) – prevent (someone) from accomplishing something
Synonyms – baffle, confuse
Antonyms – abet, encourage
Ex: In order to thwart the advancing enemy troops, the captain ordered the explosives team to destroy the bridge.
8. Disruptive (adjective) (हानिकारक) – causing or tending to cause disruption
Synonyms – distracting, unruly
Antonyms – calming, soothing
Ex: Meal-times were over quickly and were less disruptive to.
9. Optimal (adjective) (इष्टतम) – best or most favourable, optimum
Synonyms – peerless, perfect
Ex: There is an optimal distribution that can be achieved.
10. Inevitable (adjective) (अपरिहार्य) – certain to happen, unavoidable
Synonyms – imminent, impending
Antonyms – avoidable, doubtful
Ex: The changing of the seasons is an inevitable aspect of the Earth’s climate.
