Reading Dr C. Rangarajan’s Kutty Memorial Lecture After Thirty Years: Revisiting Central Bank Autonomy

This article looks at issues on central bank autonomy in the backdrop of Dr C. Rangarajan’s Tenth M. G. Kutty Memorial Lecture in Kolkata on 17 September 1993 on ‘Autonomy of Central Banks’. In this context, this article raises three key points. First, Rangarajan was ahead of his time to think through the intricate public policy issues relating to central bank autonomy. Second, thanks to him, that India could get rid of the fiscal dominance in monetary policy, in general, and the practice of ad hoc treasury bills, in particular. Third, while sea changes have happened in the Indian monetary and fiscal policy following Rangarajan’s arguments for central bank autonomy, the issue still remains relevant. The article flags three such issues: (a) capital account management, (b) transfer of RBI profits to the government and (c) regulatory jurisdiction over the payment system. JEL Codes: E4, E5