New Delhi, May 15: Chairman of the Prime Minister's economic advisory panel and former RBI chief C Rangarajan has strongly supported Reserve Bank Governor D Subbarao's demand for law-backed autonomy to the central bank.
 "I think we really need to move towards a situation in which the central bank of the country acts according to what it considers to be the right thing to do. Therefore, autonomy for the RBI is a good thing and we should work towards it", Rangarajan, Chairman of the Prime Minister's Economic Advisory Council (PMEAC) told PTI.
 However, he said the RBI autonomy should be "reconciled" with the Finance Minister's accountability to Parliament.
 "The Finance Minister is ultimately responsible for management of the economy. Therefore, we need to work out an arrangement by which the responsibility of the Finance Minister towards Parliament and the autonomy of the central bank are reconciled", Rangarajan said.
 Subbarao recently pitched for a legally-backed formal autonomy for the apex bank to be able to deal more effectively with monetary issues, while maintaining that the Government has not interfered so far with the Reserve Bank's functional autonomy.
 "...the central bank should be given legally-backed, formal autonomy", Subbarao said while addressing a meeting of the Central Bank Governance Group in Basel , Switzerland.
 Although the RBI Act empowers the Government to give directions to the central bank in public interest, the Centre has thus far refrained from doing so.

Lastupdate on : Sun, 15 May 2011 21:30:00 Makkah time
Lastupdate on : Sun, 15 May 2011 18:30:00 GMT
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