Yaga Venugopal Reddy popular as YV Reddy is a man of few words, but his words carry a lot of weight — especially in the world of finance. The veteran in finance and finance policies was against the decision of demonetisation and also the way it was implemented.
The soft-spoken former governor of Reserve Bank of India chose strong words to describe the state of play at the central bank. The “institutional identity of the RBI has been damaged” and it is facing “reputational risk”, Reddy told a television news channel in Hyderabad, referring to demonetisation — the way the decision was made and handled.Members of the ruling dispensation cannot brush aside Reddy’s criticism under the pretext that he was a policy maker who benefitted from the patronage of the Congress.
A major part of his 11-year stint at the RBI — first as deputy governor and then as governor — was under the NDA government.
Also, Reddy doesn’t have a reputation for speaking out of turn. If he has chosen not to sit it out, there is reason to believe the credibility of the RBI has been seriously undermined.
The note-ban decision is perhaps the biggest disruption India’s financial system has seen since Independence. Yet, it emerges now that the decision was taken by the government and not the RBI, although decisions such as demonetisation fall in the domain of the latter, which is a constitutional entity.
Worse, according to the RBI’s own admission made before a parliamentary committee, the central bank was given just a day’s notice to execute the decision.
