Raghuram Rajan, in his last public speech, before his departure, has batted for the institution’s independence and urged the government to elevate the ranking of the central bank’s chief on Saturday.

He said that the ranking of the Reserve Bank of India (RBI) governor, which is currently at the level of cabinet secretary, needed to be commensurate with the role. This was one of the issue behind Rajan’s announcement of not going ahead for the second term as the RBI governor.

In his speech to University students in New Delhi, Rajan said, “There is a reason why central bank governors sit at the table with the finance minister in G20 meetings.”

“There may be some virtue in explicitly setting the governor’s rank commensurate with her position as the most important technocrat in charge of economic policy in the country,” he said.

While batting for the RBI’s independence he said that the Central bank’s role should be clearly defined by the government, such as whether it can speak out when it believes the government’s fiscal action threatens economic stability.

He said, “How much should the RBI warn on fiscal profligacy, including the building up of contingent liabilities, and when should such warning be seen as interfering in the legitimate decisions of the elected representatives of the people?”

Raghuram Rajan’s tenure is ending on Sunday, while the new governor Urjit Patel’s handover ceremony will take place on Tuesday, reports said.

By Prajakt K.