There is no harm in central bank deciding monetary policy in consultation with the government, former Reserve Bank of India (RBI) Governor Bimal Jalan said.

Mr.  Jalan said that consulting the government before taking a monetary policy initiative would not amount to infringement on the central bank's independence.

Speaking on the topic, he said, "Everything you (RBI) do, you must have consultation with the government.  Consultation process is extremely important...  The collectivity of decision making between (RBI and Finance Ministry) should not be compromised."

Mr.  Jalan was speaking at an event organised by Centre for Advanced Financial Research & Learning (CAFRAL).

Another former RBI Governor Y V Reddy too said that following a consultative approach before deciding upon important monetary issues would not harm the central bank's independent authority.

However, D Subbarao, who stepped down as governor of the central bank last year, said that it always remained a big challenge for the apex bank to assert its monetary authority.

During Subbarao's tenure, there had often been tensions between the Finance Ministry and RBI over the monetary policy.  While the Finance Ministry stressed on the need to cut key interest rate to provide a boost to the economy, Subbarao often overlooked such recommendations to keep inflation under control.