Subverting India’s CBI or RBI Will Spell Disaster

In Spy vs. Spy, a comic strip published in the American satirical publication, MAD magazine, two spies, one in black and the other in white, are constantly at war with each other, one trying to outdo the other by using booby-traps, often with absurd consequences. The wordless strip was the creation of a Cuban expatriate cartoonist, Antonio Prohias, in the early 1960s and appeared to parody the Cold War era. The black spy and the white spy were clearly on opposite ideological sides but in what has been playing out in recent weeks at India’s powerful apex investigative agency, the Central Board of Investigation (CBI), the protagonists pitted against each other are ostensibly on the same team: the feud, simmering for a while before it burst into the public eye, was between the top man at CBI and his deputy.

The bizarre goings-on at CBI where the government eventually stepped in to suspend both men, installing an acting head of the agency, and a case was filed with the Supreme Court has obvious political undertones. And it is not difficult to see that the government has not been objectively unbiased in its actions, favouring one man over the other for reasons that could have larger ramifications as India’s general elections to choose a new Parliament approaches. The government, on its part, has termed the internecine conflict at the apex investigative agency as “extraordinary and unprecedented”, while the opposition parties have accused it of meddling in the affairs of an institution whose autonomy is essential to its core objectives of functioning.

This is not the first time that the government of the day has interfered in the affairs of the CBI. The genesis of the current feud in CBI may be allegations of the now suspended top man accusing his deputy of taking a bribe but the CBI (whose motto, incidentally, is “Industry, Impartiality, Integrity”) has been a convenient tool that successive governments have used since the agency was established in 1963. The government appoints the CBI’s director and although in theory he is vested with independence and a high degree of autonomy, in practice it is otherwise. Governments have been known to use the agency for its own interests: to target opposition politicians; to investigate business tycoons who don’t play ball; and to act as a convenient coercive weapon when it comes to contesting elections.

In 2013 when the Congress-led UPA government was still in power, a Supreme Court judge publicly declared that the CBI was a “caged parrot” and “its master’s voice”. On that instance, during a hearing on the controversy regarding allocation of coal mining licences to private companies, the judge berated the government’s top lawyer and said there was clear evidence of interference in a CBI inquiry, which ought to be independent. There are several other instances where the elite investigative agency’s ability to work independently and, to quote a part of its motto, impartially, has been in serious doubt. It is not uncommon to hear of powerful people with connections in the government to have allegedly used CBI for their vested interests.

If a premier investigative agency becomes a caged parrot that mouths its master’s voice, its very raison d’etre is challenged. Subversion of that kind—such as, for instance, we are witnessing now—is a death knell, not only for CBI but also for the rule of law, and the Constitution. The government can certainly be empowered to appoint the heads and other important functionaries of agencies such as the CBI as long as it does so in a transparent manner with adequate checks and balances such as, perhaps, parliamentary approval but once it does so, it has to maintain an arm’s length distance to enable the organisation to function fairly, independently, and in keeping with its non-partisan and unbiased objectives.

Even as the CBI matter blows up into a major controversy, there comes the sign of yet another one. A few days ago, one of the four deputy governors of Reserve Bank of India (RBI), India’s central bank, underscored the need to protect the independence of the bank and resist government interference. Tensions between the government and its central bank, which is responsible for monetary policy, including keeping a check on the banking system and controlling interest rates that affect prices, have been simmering for a while. In 2016, the then governor of the RBI, noted economist Raghuram Rajan, quit after serving a single term ostensibly because of growing differences of the bank and its policies with the government, which is believed to have plumped for more populist actions by the bank.

In recent months, the RBI brass has differed with the government on a several issues, including the need to increase control over state-owned banks, many of which have staggering bad debts; and over limiting the transfer of surpluses to the government so that the RBI’s balance sheet is stronger. Crucially, the deputy governor gave the example of Argentina in 2010 when that financially beleaguered country’s central bank chief had resigned after the Argentinian government had insisted on appropriating a large part of the bank’s reserves. That had led to a serious debacle in the financial markets and for the Argentinian economy.

The nuanced reference to Argentina by a senior sitting official of the RBI needs to be noted seriously. Could this mean that the RBI and the government of India are headed towards a showdown? The independence of a central bank is crucial to the healthy and transparent functioning of a country’s banking system and its financial markets. Compromising that could spell as much of a disaster as an elite investigative agency that is rendered a caged parrot would.

Sanjoy Narayan tweets @sanjoynarayan



Leave a Reply

Notify of