ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Another Peep into the Cathedral Crypt

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In his article 'Central Bank and Government' (August 19) A G Chandavarkar takes a new look at the cathedral crypt and stumbles upon an important find – the skeleton of the first governor of the RBI, Osborne Smith. After conducting a detailed aetiological investigation into the earlier determination of Smith's tenure, Chandavarkar unfolds a story, untold by historiographers, from the early history of the RBI. He has not left any stone unturned to gather all historical facts from primary and archival sources to unravel the mystery behind the exit of Smith. He takes umbrage at the continuing silence of historiographers who have paid scant attention to this sordid story of personal animosity between Grigg, the finance member, and Smith, the governor, and laments their failure to perceive the whole episode in a proper perspective. He attempts to fill this hiatus with a highly dramatised version of the episode. The very title of the article proclaims the gravamen of the article: in Chandavarkar's perception this episode was an intra-organisational issue rather than a confrontation between two individuals occupying high positions. To ascertain whether any autonomy issue was involved, a teleological view of RBI and also an examination of the juridical framework of the organisation become necessary.

The raison d'etre of the Bank was the need for instrumentality to deal mainly with the Bank of England and other central banks. Western countries wanting to have governance structures as obtaining in 'civilised nations' prescribed and still prescribe minimum standards in many spheres in their economic relations with LDCs. For instance, minimum standards in FDI, minimum standards of central banking supervision, etc, are of a piece with their effort to impose their conditions to create a favourable climate for themselves in the LDCs. Having a central bank, like in the UK, was thus a minimum requirement for any country. In such a milieu, the major objective was to have an instrumentality along with other instrumentalities like the ICS to serve their imperial interests.

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