RBI governor Urjit Patel has lauded the Narendra Modi government for instituting three landmark reforms, which, he said, will shape India’s economic evolution for the better in the years and decades to come. Speaking at the convocation ceremony at the Meghnad Desai Academy of Economics, the RBI governor said that “one cannot and should not underestimate the sagacity and uncommon courage of the government to undertake reforms that can only be described as truly transformative”.
Urjit Patel listed three reforms — amendments to the RBI Act, the establishment of the GST Council, and the enactment of the Insolvency and Bankruptcy Code — as unprecedented steps in India’s history.
“In 2016, the Government legislated amendments to the RBI Act to invest the Reserve Bank of India with the specific mandate to operate the monetary policy framework of the country whose primary objective is to ‘maintain price stability while keeping in mind the objective of growth’.
This was a fundamental shift in the institutional architecture for the conduct of monetary policy, with the formal transition to a flexible inflation targeting framework and the relinquishing of the monetary policy decision by the Governor to a six-member monetary policy committee (MPC),” Urjit Patel said at the convocation.
On the establishment of the GST Council, headed by Union Finance Minister and comprised of states’ finance ministers, Urjit Patel said that it has created one of the most effective institutional mechanisms for cooperative federalism. “…it has offered a refreshing counter-narrative to the divisive course of the international federal dialogue, voluntarily choosing to relinquish and then pool sovereignty for a larger collective cause,” he added.
Every once in a while, the GST Council meets to discuss issues and takes decision-related to the GST. So far, the GST Council has met 28 times.
Third reform that has been lauded by Urjit Patel is the Insolvency and Bankruptcy Code. He said that IBC is a watershed towards improving the credit culture in our country. “The IBC provides for a single window, time-bound process for resolution of assets with an explicit emphasis on promotion of entrepreneurship, maximisation of value of assets, and balancing the interests of all stakeholders,” Urjit Patel said.