Prime Minister Narendra Modi has admitted that he once described former Reserve Bank of India (RBI) Governor Urjit Patel as a “snake who sits over a hoard of money.” This was revealed by Finance Secretary Subhash Chandra Garg.

Details on Urjit Patel was described to a ‘money-hoarding snake’ by PM Modi in a book

Garg stated that PM Modi’s statement against Urjit Patel occurred on September 14, 2018, at an economic review meeting in his upcoming book, “We Also Make Policy.”

The Indian Express newspaper has released excerpts from Garg’s book describing the meeting and the circumstances leading up to Urjit Patel’s resignation. The publication of the book, which provides insight into the tight relationship that existed at the time between the Government and the RBI, is planned for October.

The information comes from a meeting on September 14, 2018, where PM Modi vented his frustrations while discussing the state of the economy. Urjit Patel delivered recommendations at this almost two-hour discussion, all of which were directed at the government; no additional actions were suggested for the RBI beyond its ongoing initiatives.

According to Garg, “He (Patel) offered some recommendations—all for the government to take and nothing for the RBI to do, other than what it had already been doing.” Garg noted that Patel seemed to believe that the RBI was failing to adequately manage the situation and was unlikely to take more action to address the economy’s problems or settle conflicts with the government.

PM Modi’s comparison of Urjit Patel to a “snake who sits over a hoard of money” during this tense discussion signaled a significant change in his approach. PM Modi sternly advised Patel to call a board meeting and speak with the finance team and then-Finance Minister Arun Jaitley to find answers for the problems at hand.

The transfer of surplus cash from the RBI was one of the most contested issues between the government and the RBI. Garg recalled a specific meeting of the RBI board that took place in August 2017 and at which the government suggested keeping Rs. 13,400 crore of the Rs. 44,200 crore surplus that the RBI had for the fiscal year 2016–17. In line with prior norms, Garg argued for the full transfer of the surplus to the government.

The government and Urjit Patel have been at odds since Patel implemented a strict framework in February 2018 for handling non-performing loans in the banking industry. Patel eventually cited policy differences with the government as the reason for his departure as governor of the RBI on December 10, 2018.

Patel gave a somber assessment of the state of the economy during the meeting on September 14. He made recommendations like eliminating the long-term capital gains (LTCG) tax, significantly raising the disinvestment targets, luring multilateral institutions to invest in government bonds, and taking care of unpaid invoices from various businesses, including micro, small, and medium-sized enterprises (MSMEs).

The RBI’s February 12 circular, which was designed to handle non-performing loans, presented difficulties for banks that provided loans to companies in the power sector. As a result, the government used Section 7 of the RBI Act to give the RBI governor instructions after holding consultations.

Garg emphasized that the RBI chose not to cooperate with the government on this matter and abstained from participating in meetings of a committee chaired by the cabinet secretary tasked with finding solutions. “RBI chose not to work with the government on this,” he said. It did not show up to the meetings of the committee that the cabinet secretary chaired in order to find a resolution to the problem.

The post Urjit Patel was described to a ‘money-hoarding snake’ by PM Modi in a book appeared first on SomMarketer.