Question Bank

November 9, 2018 @ 2:00 pm
Question Bank

9th November 2018


(2 Question)

Answer questions in NOT MORE than 200 words each. Content of the answer is more important than its length.

Links are provided for reference. You can also use the Internet fruitfully to further enhance and strengthen your answers.


Q1. Independence of the Reserve Bank of India is important for a healthy economy. Discuss.


  • Even at the time when the idea of central bank independence began to germinate some two decades ago, this was understood to mean a ‘functional’ independence. That is, the bank would be unconstrained by the government in its functioning, which includes both the instruments it uses and how it uses them. However, its autonomy was not to extend to ‘goal’ independence. What the goals of the central bank should be were to be chosen by the government without reference to the bank. The main issue here was whether the bank should focus on inflation alone or also on the level of employment. Within a decade of this debate, it had been conceded that the focus would be exclusively on the former, and monetary policy came to be identified with ‘inflation targeting’.
  • Two points may be mentioned in this context. First, the discourse was solely among interlocutors from Western democracies, ensuring the issues were those related to their economies. Second, even as the major central banks of the world shifted to inflation targeting, in yet another example of American exceptionalism, the U.S. did not revise the goals of the Federal Reserve. It was to continue focus on maximising employment while keeping prices stable, a sensible recognition of a possible trade-off between these goals. In India where for close to a quarter century political parties of all hues appear to suggest ‘what is good for America is the best for India’, this has been missed. In 2015 the RBI was by law, in line with a “modern monetary policy”, expected to target inflation. It was to remain the banking regulator though.
  • Once we are aware of how central bank independence was first sought to be understood and of the agreement between the RBI and the Government of India in 2015, it is not difficult to separate the grain from the husk in the public spat between the two playing out in the media. The issues of contention happen to be the corrective action to be taken for stressed banks, the prudential norms to be adopted by financial institutions, the easing of liquidity and the sharing of the surplus generated by the RBI. Here, barring the last, all others are in the RBI’s bailiwick so to speak. On the other hand, on the sharing of the surplus, it is understood that the Government of India legally is the owner of the surplus generated by the country’s public institutions. Even under this architecture, though, all care must be taken to ensure that the central bank’s reserves are of a level commensurate with the extent of the financial sector and the potential degree of systemic risk from its malfunctioning, which can vary.
  • Apart from the issue of sharing the surplus, the RBI should be left alone by the government to decide on the right course of action. This derives not so much from a notion of central bank independence as it does from the point of view of a credible governance policy. The Government of India would have chosen the Governor, participated in the choice of his deputies and had a say in the appointment of even the independent members of the central board of the RBI. In addition, the board has representatives of the government on it. It should now be left to this body to decide on the precise corrective action for banks with high NPAs, the desirable state of liquidity and the prudential norms to be observed by banks. The RBI is the banking regulator after all, and for the government to attempt to direct it would constitute micro-management.
  • In the past, the RBI had a ‘multiple indicators approach’ which paid attention to inflation, growth and the current account. This may not have borne the precision conveyed by ‘inflation targeting’ but it did answer to Keynes’s dictum, “It is better to be vaguely right than to be precisely wrong.”


Q2. Although the #MeToo movement has had an impact on male dominance in various sectors, more needs to be done. Comment.


  • Sometimes to upend entrenched power structures, a revolution is required. Naming and shaming powerful men in the #MeToo campaign is in many ways a revolutionary act. The truth about most was known, spoken in whispers, but not to their face. But now that omerta has been broken by some intrepid women, there’s a palpable sense of power and possibility.
  • Revolutions are by definition anarchic, as they are aimed against those who make and enforce the rules. So it has been with #MeToo. Men are named, sometimes anonymously, and the naming itself requires punitive action to be taken against them. There isn’t really any room for discussion on context or degree of culpability. Some have raised questions about due process, and the response has been, somewhat reasonably, that due process has failed. And it is true, arguing for due process when due process has failed feels a bit like batting for status quo. So let it be said, #MeToo despite its limitations is unreservedly a good development.
  • However, the question is, what next? The #MeToo movement is more than just outing powerful men, it is about shifting the balance of power between men and women, transferring the punitive aspects — shame, denial of work opportunities — from the victim to the perpetrator. It is about ending impunity embedded in our social construct by shaping new social mores. This is and has to be a collective effort, and it is important for the #MeToo movement to have these discussions.
  • As personal accounts have tumbled out on social media, it has become obvious that the definition of “sexual harassment” is very fluid. In support, many have taken the line that sexual harassment is whatever makes the woman uncomfortable, and it’s for her to decide. This is a completely justifiable response when it comes to personal interactions, and when the response is personal by, say, ticking someone off. However, when we bring collective pressure to bear against anyone for punitive effect, we have a responsibility to collectively define behaviour which will invite punitive action. Moreover, while public opinion has reduced culpability to a binary concept, it is important to define graduated norms of unacceptable behaviour, including associated levels of criminalisation and punitive consequences. Along with the manner of establishing culpability, this is the sum and substance of due process.
  • There is no ambiguity that any form of coercion is wrong and should engender exemplary punitive consequences. Staring, telling risqué jokes, crude propositioning can be as much about social awkwardness as abuse of power. It’s not that such behaviour is not inappropriate or wrong, but we should pause and think about the consequences of bringing in state or institutional power to penalise transitional behaviours in personal interactions.
  • India as a society is transitioning rapidly, and people with widely different understandings of acceptable social mores coexist without having had time to acclimatise. There are legitimate concerns with bringing in state power to penalise transitional behaviours. First, the response is often too heavy-handed, and second, it makes social reform and gender relations too antagonistic. Section 354 of the Indian Penal Code defines sexual harassment as “physical contact, advances of unwelcome and explicit sexual overtures” but also “making sexually coloured remarks”. It is true that conviction rates under legal processes are extremely low but surely even conceptually, we don’t want to send people to jail for telling crude jokes.
  • Institutionally too, it is important to expand the discourse to talk about the measures required to create more gender-neutral spaces while retaining room for graduated levels of punishment. Censure, delayed or reduced work opportunities, suspension and firing are all forms of regulating inappropriate behaviour and we should be wary of a reductive public discourse where the institutional response is a binary of firing/not firing, with the latter interpreted as sanction and/or encouragement.
  • Impunity exists in a social construct. Till now, due process did not work because the social context was skewed in favour of marauding men. However, the long battle waged by generations of strong women before and the courage of many women today together is forcing the social context to change. It is important to use this moment to institutionalise and craft a new, more effective due process. That should be #MeToo’s lasting legacy.

Leave a comment