The Centre-RBI War Is Escalating Dangerously. Here’s Why We Should Be Worried.

M.K.Venu writes in thewire “A former RBI governor, respected globally for steering India’s economy and the financial system during the 2008 global crisis, told me that there are also macroeconomic consequences of taking large sums of money out of the RBI at once. What he clearly implied was that the RBI handing a few lakh crores to the government would be akin to new money creation, which would then have a ripple impact in terms of rising inflation, expanding the current account deficit and weakening the rupee. This would not be wise, coming at a time when attempts are being made to bring the very same macro indicators under control. ”