In a deregulated environment, there is considerable scope to reduce micro-management issues in the relations between the Government and the RBI. Fifth, at the level of degree of transparency, there is a temptation to continue, what has been termed as the “joint-family approach”. The approach ignores basic tenets of accounting principles in regard to transactions between RBI and Government.
It gives satisfaction to all participants that all of them are working together for growth and stability. In the process, however, the integrity of the respective balance sheets of Government and RBI gets eroded making both autonomy and accountability difficult to assess.