Indian Express
Express India
Screen
Loksatta
Express Cricket
Kashmir Live
Biz Publications
Indian Express |
Express India |
Screen |
Loksatta |
Express Cricket |
Kashmir Live |
Biz Publications |
|
RBI staff is going on strike on August 20 to protest against the outsourcing of some of the central bank’s functions, and demanding more recruitment. The RBI employees’ association claims that inspection of banks, non-bank financial intermediaries and urban cooperative banks is being done offsite. But, surely since RBI is one of the biggest (in terms of employment) central banks in the world after Russia and China, RBI management is on the right track as far as outsourcing goes. A freeze on jobs in an overstaffed central bank is a no-brainer. Indeed, the RBI employees’ association is perhaps destined to lose more such battles—with the changing role and function of RBI, the central bank will need far fewer people to manage its activities. Looking at the Percy Mistry and Raghuram Rajan committee reports on the reform of the financial sector regulatory architecture, the way forward is for RBI to proactively start adjusting and changing, rather than be pushed out fighting for turf and trying to save jobs for employees. In the final stage, where RBI will be an inflation targeting central bank, very few people, and certainly very few Class III employees that its employees association consists of, will be needed.
When the task of public debt management is handed over to an independent debt management office, as was announced in the Union Budget of 2007-08, when there is a separate banking regulatory authority, and when RBI gives up the job of capital controls as India becomes not merely a de facto open economy but also a de jure open economy, RBI’s job will be limited to setting interest rates to maintain low inflation. It will run models and help monetary policy committee members make up their mind. This scenario is, of course, not immediate, but it is heartening to know that RBI understands where it is heading and has already started the business of cutting jobs. The next step should be for RBI to take the lead in transforming itself as an organisation and in giving up objectives where there is a conflict with monetary policy such as public debt management and exchange rate manipulation. It should, like many central banks in the world, lead this change rather than oppose it.
Discuss this story on expressindia forums
|
|
Most Read Articles |
 |
 |
About Us | Contact Us | Advertisers | Site Map | Make us your homepage | Work for Us | RSS | Subscribe | Electronic Edition | Privacy Policy© 2008: Indian Express Newspapers (Mumbai) Ltd. All rights reserved throughout the world
