Centre trying to ‘capture’ RBI to tide over its fiscal crisis, says P Chidambaram
The Congress leader warned that any such attempt will be ‘catastrophic’.
Congress leader P Chidambaram claimed on Thursday that the government was trying to “capture” the Reserve Bank of India to tide over its fiscal crisis. The former finance minister warned that any such attempt will be “catastrophic”, PTI reported.
“The government stares at a fiscal deficit crisis,” Chidambaram said at a press conference in Kolkata. “The government wants to step up the expenditure in an election year. Finding all avenues closed, in desperation, the government has demanded Rs 1 lakh crore from the reserves of RBI.”
Chidambaram claimed that the Centre will invoke Section 7 of the RBI Act, which gives it the power to issue instructions to the central bank, if Governor Urjit Patel refuses to yield to the government’s demands. “The day of reckoning is November 19 when the RBI board is scheduled to meet,” he said. “The government has packed the RBI board with its handpicked nominees and is making every attempt to ram through its proposal at the meeting.”
The Congress leader added that if the RBI defies the government, or Patel resigns, the consequences will be “catastrophic”.
On Tuesday, Congress President Rahul Gandhi had claimed that Prime Minister Narendra Modi needs Rs 3.6 lakh crore from the RBI “to fix the mess his genius economic theories have created”. Congress spokesperson Manish Tewari claimed that the Centre wanted to “demolish” the RBI.
The claims followed a report in The Indian Express that the finance ministry had asked the central bank to transfer Rs 3.6 lakh crore from its reserves to the government. The RBI did not accept the proposal, according to the newspaper. The report claimed that this is “at the heart” of the ongoing rift between the Centre and the RBI.