Patel isn’t the first governor to resign, nor will he be the last.
Government officials have been complaining in the past few months that the central bank should allow lenders to make loans more easily and want the RBI to hand over some of its surplus reserves to help fund the fiscal deficit.
His resignation for ‘personal reasons’ has the Opposition in a huff but he’s hardly the first miffed RBI governor who could no longer handle the prolonged fiscal arm-wrestling with the Centre.
Patel isn’t the first governor to resign, nor will he be the last.
Even Dr Manmohan Singh, who called it a ‘severe blow to the economy’ and has batted for both sides - Centre’s and RBI’s – admitted that the RBI Governor serves at the pleasure of the Finance Minister. So, it’s no surprise given the contradictory goals of the Finance Ministry and RBI to see its fair share of resignations.
The five RBI governors who have put in their papers (excluding Patel) over the years include
Osbourne Smith - First Governor of RBI from 1 April 1935 to 30 June 1937
Benegal Rama Rau - Governor of RBI from 1 July 1949 to 14 January 1957.
S Jagannathan - Governor of RBI from 6 June1970 to 19 May 1975.
KR Puri - 20 August 1975 to 02 May 1977
RN Malhotra - 4 February 1985 to 22 December 1990.
The very first one to resign was Osbourne Smith whose stewardship of the Imperial Bank won him bouquets and whose outlook on policy issues and interest rates earned him brickbats that led to a resignation before his term ended.
The second departure is far more well-documented and resigned after a very public spat with Finance Minister TTK. He even reached out to Nehru, but the first PM preferred to back his finance minister and Rama Rau resigned.
The next one, S Jagannathan, reportedly ran into a cul-de-sac over Maruti’s credit limit and was asked to leave two weeks before his term ended in 1975. Legend has it he left Chief Economic Advisor Manmohan Singh enraged when he announced the slack season credit policy before quitting.
KK Puri – considered a Sanjay Gandhi man - quit in 1977 after the Janata government came to power.
The last resignation – before Patel – has a familiar named involved.
While renegade BJP leader Yashwant Sinha termed the Patel’s resignation a ‘clear sign of the government trying to interfere with RBI’, he had his own run with The RBI back when he FM in the short-lived Chandra Shekhar Government in 1991. Malhotra, who was unpopular with the ministry over his nagging over the increased fiscal deficit, was nudged gently to move along by Sinha.
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