Hours after an all-party meeting, chaired by Prime Minister Narendra Modi, Reserve Bank of India Governor Urjit Patel quit citing "personal reasons". His resignation came nearly nine months ahead of the completion of his three-year tenure.
"On account of personal reasons, I have decided to step down from my current position effective immediately," said the 55-year-old who also served as the deputy governor at the RBI for three years.
His decision, analysts say, was influenced by the intense pressure on the central bank from the government to ease regulatory curbs.
Former RBI governor Raghuram Rajan, who was among the first ones to react on his successor's resignation, said "all Indians should be concerned".
"I think this is the ultimate statement a regulator or a civil servant can make. It should be respected. We should go into the details on why there was an impasse which forced him to take this ultimate decision and I think this is something all Indians should be concerned about because the strength of our institution is really important," Mr Rajan said.
PM Modi described Urjit Patel as "an economist of a very high caliber" and credited him for steering the banking system from "chaos to order".
Dr Urjit Patel is an economist of a very high calibre with a deep and insightful understanding of macro-economic issues. He steered the banking system from chaos to order and ensured discipline. Under his leadership, the RBI brought financial stability.
- Narendra Modi (@narendramodi) December 10, 2018
Dr. Urjit Patel is a thorough professional with impeccable integrity. He has been in the Reserve Bank of India for about 6 years as Deputy Governor and Governor. He leaves behind a great legacy. We will miss him immensely.
- Narendra Modi (@narendramodi) December 10, 2018
Finance Minister Arun Jaitley also appreciated his efforts and said, "The government acknowledges with deep sense of appreciation the services rendered by Dr Urjit Patel to this country both in his capacity as the Governor and the Deputy Governor of the RBI. I wish Dr Patel all the very best and many more years of public service."
But the opposition was unsparing in its attack and blamed the government for Urjit Patel's "unceremonious exit".
While referring to chaos in the CBI and Urjit Patel's resignation, West Bengal Chief Minister Mamata Banerjee said, "From CBI to RBI, institutions have become total disasters; it is matter of great shock."
Ms Banerjee accused the BJP of "behaving like a dictator" and alleged "financial stability is not there... financial emergency has started."
This has never happened before. This is unprecedented. We are deeply concerned. The RBI is the custodian of public money. The credibility of all institutions is being destroyed. This is a financial and economic emergency
- Mamata Banerjee (@MamataOfficial) December 10, 2018
The Congress claimed that the integrity of another institution had been "denigrated" under the "tyrannical Modi regime".
"There is consensus among opposition parties that the assault on institutions such as the RBI must be stopped," Congress president Rahul Gandhi said after top leaders of over a dozen non-BJP parties met as part of attempts to forge a front to take on the ruling party in the 2019 Lok Sabha elections.
Urjit Patel's resignation , result of arrogance of a government's attempt to stymie yet another institution and erode its autonomy .
- Kapil Sibal (@KapilSibal) December 10, 2018
Economic policy should not be driven by politics alone .
When PM , not economists , takes economic decisions the mess is for all to see .
"Another one bites the dust. This is the result of our 'chowkidar's' assault on democratic institutions - RBI Governor, Urjit Patel steps down," said a tweet from Congress' official handle.
Government's immediate agenda is to grab the reserves of the RBI to meet its fiscal deficit target and to get funds for spending in an election year.
- P. Chidambaram (@PChidambaram_IN) December 10, 2018
Integrity of another institution -RBI, stands denigrated by a tyrannical Modi regime as reflected in RBI Governor's unceremonious exit.
- Randeep Singh Surjewala (@rssurjewala) December 10, 2018
Economic anarchy, compromising India's monetary policies & attempting to stifle RBI's independence by Govt appointed puppets is the DNA of BJP!
RBI governor Urjit Patel has been eased out since he refused to allow the Modi govt to plunder Rs Three lakh crore of RBI reserves. Now Modi govt will get a more pliable RBI governor who will allow this loot
- Arvind Kejriwal (@ArvindKejriwal) December 10, 2018
The resignation, though widely anticipated amid the escalating feud, was "surprising", said RBI central board member S Gurumurthy, a representative of the government on the RBI board.
The government has been pressuring the RBI into easing its regulatory curbs on some banks, infuse more liquidity and relax capital norms as it faces a slowing economy ahead of next year's national elections.
The friction between the centre and the RBI exploded last month, when Deputy Governor Viral Acharya said that undermining a central bank's independence could be "potentially catastrophic".
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