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RBI governor’s resignation ‘severe blow’ to nation’s economy, says Manmohan Singh

Former prime minister Manmohan Singh Monday termed RBI Governor Urjit Patel’s resignation as “very unfortunate” and said it was a “severe blow” to the country’s economy.

Patel, who had a run in with the government over autonomy of the central bank, resigned from his job earlier on Monday, citing personal reasons.

His resignation came four days ahead of a crucial meeting of the board of the central bank that could have discussed issues of simmering differences with the government.

In a statement, Singh said he hoped that the RBI Governor’s sudden resignation is not a harbinger of Prime Minister Narendra Modi-led government’s attempts to “destroy” the institutional foundations of India’s USD 3 trillion economy.

He said it will be “foolhardy” to diminish institutions for short-term political gains.

“It is with great sadness that I received the news of the resignation of the Governor of the Reserve Bank of India, Urjit Patel,” Singh said.

“Patel’s sudden resignation, at a time when the Indian economy is faced with many headwinds, is very unfortunate and is a severe blow to the nation’s economy,” he said.

The former prime minister added that he has known Patel to be an economist of high repute and also someone who cared deeply about India’s financial institutions and economic policy.

“Building institutions take a long time and effort but they can be destroyed in a whimper. It is institutions such as the RBI, among many others, that have served as the edifice of our great nation’s progress since independence. It will be foolhardy to diminish these institutions for short-term political gains,” Singh said.

He recalled RBI Deputy Governor Viral Acharya’s apprehensions about the government’s intent to raid the capital reserves of the RBI for fiscal purposes.

“I hope the resignation of the Governor is not a sign that this may soon become a reality,” he said.

“I also sincerely hope that this sudden resignation of the Governor is not a harbinger of the Modi government’s attempts to destroy the institutional foundations of India’s USD3 trillion economy,” he added.

Patel, 55, who took over as the 24th Governor of the central bank on September 5, 2016, had the shortest tenure since 1992.

His three-year term was to end in September 2019 and he was eligible for a second term, like most of his predecessors.

The government seems to have accepted his resignation with Prime Minister Narendra Modi saying Patel will be missed “immensely”.

No announcement of Patel’s replacement has been made yet.

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