‘PM Modi compared ex-RBI governor Urjit Patel to a snake’, claims ex-finance secretary in his book

September 25,2023

Prime Minister Narendra Modi compared the then Reserve Bank of India governor Urjit Patel as a ‘snake who sits over a hoard of money’, former finance secretary Subhash Chandra Garg has claimed in his book ‘We Also Make Policy’.

In his book, the excerpts of which were carried out by a news website , Garg said that the Narendra Modi government's ‘frustration’ with the then central bank chief had grown as early as February 2018 and escalated a month later when he accused the government of its inability to shed regulatory authority over nationalised banks, which according to him left the RBI with inadequate regulatory authority over the public sector banks compared to private-sector banks.

In his book, Garg accused Urjit Patel of allegedly trying to scuttle the Centre's electoral bonds scheme by insisting that they should only be issued by the RBI and that too in digital mode. In June that year, the then RBI boss raised repo rate to 6.25 per cent citing a potential rise in inflationary pressures to the government’s decision to hike minimum support prices. Three months later, he raised the repo rate by 25 per cent. As a result, pressure grew on the government to put additional capital in banks worth lakhs of crores.

'Jaitley called Urjit Patel's solutions impractical, undesirable’

According to Garg, then finance minister Arun Jaitely felt bad by the way Patel was conducting. There was a perception that the latter wanted to go down in history as the most independent RBI governor. During a meeting convened by PM Modi on September 14, 2018, Patel gave a presentation in which he gave some solutions including the scrapping of long-term capital gains tax, scaling up disinvestment targets, approaching multilateral institutions asking them to invest in government of India bonds and paying up the pending bills of several companies.

In his book, Garg claimed that Jaitley out of frustration called Urjit Patel's solutions as ‘totally impractical and generally undesirable’.

‘Snake who sits over a hoard of money’

In his book, Garg said the tension between the Centre and RBI had weighed on the mind of PM Modi, who had picked Patel as the governor and defended him. The ex-finance secretary claimed Patel's communication lines with Jaitley and then officiating finance minister had broken down, and the only communication took place through then additional principal secretary PK Mishra in the Prime Minister's Office (PMO).

Stating that the prime minister was ‘sick of the situation’ as he had listened to Patel's presentations carefully and patiently.

“He (PM Modi) assessed that the RBI was not on top of the situation and was unwilling to do anything meaningful to address the economic situation and resolve its differences with the government”, Garg wrote, adding that the PM lost his cool and took on Patel.

An angry Modi attacked Patel on RBI's stand on the resolution of non-performing assets and its “intransigent, impractical and inflexible attitude to finding solutions”. He slammed the governor for proposing the withdrawal of the LTCG tax, which had since stabilized with hardly anyone objecting to it, and asking for fiscal deficits to be cut down further in the middle of the financial year. The prime minister, Garg added, compared Urjit Patel to the “snake who sits over a hoard of money, for being unreceptive to putting RBI’s accumulated reserves to any use”.