Amid the face-off between the government and Reserve Bank of India (RBI) over several vital issues, former governor of the central bank Raghuram Rajan on Tuesday said some people have been accusing the institution of following Western practices blindly and being in thrall of the West, but it takes a view based on how it sees the Indian economy.

Rajan’s comments are seen as a veiled swipe at Swaminathan Gurumurthy, a chartered accountant and the co-convenor of Rashtriya Swayamsevak Sangh (RSS) affiliate Swadeshi Jagran Manch.

Gurumurthy, who was recently nominated to the RBI board by the government, had berated the central bank and its office holders, including the Rajan, for "destroying Indian business".

In an exclusive interview to CNBC-TV18, Rajan said, “If on the other hand, we tailor it to Indian conditions, we are asked why you don’t tailor it to Western conditions. I think you cannot pick and choose which regulation you like and which regulation you don’t.”

Regarded as a torchbearer of the so-called 'Bharatiya economics', Gurumurthy has strong views on economists educated in Western universities and has in the past criticised their alleged ignorance of the Indian terrain.

In the interview with CNBC-TV18, Rajan defended the RBI against government interference. “Once you have appointed these deputy governors and governor, you have to listen to them because that is what you have appointed them for ... they are your safety belt,” he said.

The simmering tensions between the government and RBI over issues such lending restrictions, more cash availability to the non banking finance companies (NBFCs) and who controls the institution's reserves after deputy governor Viral Acharya said undermining central bank independence could be “potentially catastrophic”, indicating the authority was pushing back against government pressure to relax its policies and reduce its powers ahead of the general election due by May.

Gurumurthy has written to RBI governor Urjit Patel complaining against Acharya's comments on maintaining regulatory autonomy on October 26 speech.

Rajan said the ongoing rift between the finance ministry and the RBI can be resolved if both sides respect each other's intent. "The RBI has the liberty to say no if the government pushes it to be lenient,” he said.

First Published:Nov 6, 2018 12:54 PM IST