On the note ban, he said that Indian economy would have collapsed if the government had not taken the decision to demonetise high value currency notes in 2016.
Reserve Bank of India's (RBI) board member S Gurumurthy on Thursday said the stand-off between the government and the central bank was not a "happy situation".
His comments come following the differences between the two on the regulatory issues ranging from easing of lending norms for micro, small and medium enterprises (MSMEs) to providing liquidity to non-banking finance companies (NBFCs) to step up growth.
The RBI's Board meeting on November 19 is to likely to discuss the contentious issues.
While delivering a lecture on the 'state of the economy: India and the World' at the Vivekananda International Foundation (VIF) here in the national capital, Gurumurthy, who is also the chairman of the VIF, stressed on the lack of credit for the MSME sector. He said that India should not go beyond the prescribed Basel capital adequacy norms.
He further said, "India-centric thinking is needed and we have to ensure that proper discourse takes place in Delhi."
Gurumurthy, who has close links with the right-wing Rashtriya Swayamsevak Sangh (RSS), said the country can't print money to infuse liquidity in the system as "the Indian government had given up the right to print Indian rupee. We can't print money to infuse liquidity."
The government is only asking the central bank to frame a policy on reserves, he said, amid reports that the government wants the RBI to transfer the surplus reserves.
On the NPA problem, he said, "The provisioning norms to tackle bad loans created stress in the banking system. It should have been gradual." He said that banks could be recapitalised with government bonds.
However, "it was time to think beyond NPAs and recapitalisation", he said, adding that there was a need of a comprehensive thinking model.
On the note ban, he said that Indian economy would have collapsed if the government had not taken the decision to demonetise high value currency notes in 2016.
"Without it, there would not have been no Goods and Services Tax (GST) and therefore no formalisation of economy."
On the issue of Current Account Deficit (CAD) and trade deficit, Gurumurthy said there was a need to bring it down in next one year.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "S Gurumurthy")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}