Kristian Rouz — Politically-motivated tampering with central bank policies poses a risk to macroeconomic stability, international credit rating agency S&P Global says in its most recent statement on India. READ MORE: India Chooses the Man Who Led Demonetization as Next Central Bank Governor The South Asian nation has been caught in the crossfire of a heated central banking debate over the past few months, as India’s slowing economy is seen as eroding the public trust in its democratically-elected leader, Narendra Modi. S&P said it could downgrade its credit rating for India unless New Delhi leaves the central bank alone. The agency stressed that India’s gigantic banking system could be exposed to risks of a greater uncertainty and the so-called “human factor” — if the central bank abandons its rules-based approach to governance in favour of supporting the economy to make certain political figures look good. The statement comes just weeks after several reports suggested in early November that the Indian government could increase pressure on the RBI in order to achieve its economic priorities. Some central bankers rebuffed the government’s advances at the time, citing the RBI’s mandate, which is to support long-term macroeconomic stability rather than promote short-term credit-driven expansion. READ MORE: Reserve Bank of India Deputy Governor Defends Central Bank Independence Subsequently, this standoff sparked speculation that several top Indian central bankers could lose their jobs — allegedly due… Read full this story
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