RBI must not be a puppet of international powers

Finance Minister P Chidambaram's statement that Raghuram Rajan should continue to head the Reserve Bank of India under any new government, and Raghuram Rajan's call for a global financial system, give away the fact that those who want to control the Indian economy view RBI as a suitable tool for this purpose.

Any new international financial system in the name of stabilising the global economy will lead to the transfer of wealth from India and China to bail out European and American banks. The demands for such a system typically arise from global institutions which are responsible for the current global economic crisis and which were established to supposedly ensure global economic stability.

One such institution, the International Monetary Fund, has such a dismal record that it has destabilised the economy of every country in which it has interfered. Its prime role has been to help American corporations and European bureaucrats siphon off money from various countries in distress. Even the distress was usually the result of pursuing some economic policy prescribed by so-called experts in American and British universities. Raghuram Rajan has the dubious distinction of not only working for the IMF but also belonging to the class of experts in American universities responsible for various economic crises.

It is important that India does not become a pawn in the hands of those who want to make its economy subservient to foreign powers. The plan for the creation of a central bank in India was first made by the British in the 19th century as a means to help Britain control the gold in India. Among the advocates of the bank was Alfred de Rothschild whose proposal was made to the Currency Committee of 1898 and 1899. The Indian economist RC Dutt argued before the same committee that the currency rates in the country should be set by the market.

When the British tried to pass a bill to set up the Reserve Bank of India in 1928, Indian freedom fighters successfully blocked the move as they believed that it was against the interests of India. However, during the Round Table Conferences held in 1931 and 1932, the British insisted on the establishment of a Reserve Bank as a condition for the transfer of power to India. They also wanted the Indian legislature to have no powers over the bank and Britain to retain the right to appoint the top two positions in the bank. Such extraterritorial controls form the basis of the calls for RBI's complete 'autonomy.

'RBI's recent actions have been aligned with current American objectives and the aims outlined by the British before they left India, and these actions have vindicated the fears of Indian freedom fighters. For example, it has imposed curbs on the import of gold thus shoring up the US dollar while depriving Indian citizens the opportunity to seek shelter from inflation. Such curbs do not exist on the people of Europe or the US. It is thus important to review the reasons for the existence of the RBI and find an alternative currency system that is not based on central control either at the national or the international level.

The creation of a global economic system combined with the 'autonomy' of RBI would only mean that the RBI will be unaccountable to the people of India while it actively works for international powers. India must swiftly act to prevent this situation and forbid the RBI from coming into contact with foreign institutions.

The author is an expert on technology and economic issues. Views expressed are personal