New Delhi, May 15 (PTI) Chairman of the Prime Minister's economic advisory panel and former RBI chief C Rangarajan has strongly supported Reserve Bank Governor D Subbarao's demand for law-backed autonomy to the central bank.

"I think we really need to move towards a situation in which the central bank of the country acts according to what it considers to be the right thing to do. Therefore, autonomy for the RBI is a good thing and we should work towards it", Rangarajan, Chairman of the Prime Minister's Economic Advisory Council (PMEAC) told PTI.

However, he said the RBI autonomy should be "reconciled" with the Finance Minister's accountability to Parliament.

"The Finance Minister is ultimately responsible for management of the economy. Therefore, we need to work out an arrangement by which the responsibility of the Finance Minister towards Parliament and the autonomy of the central bank are reconciled", Rangarajan said.