Modi govt trying to capture RBI-Chidambaram

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Mumbai: Senior Congress leader P Chidambaram on Thursday accused the Narendra Modi government of trying to capture the Reserve Bank of India to tide over its fiscal crisis, warning that any such move would be catastrophic.The government stares at a fiscal-deficit crisis. 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,” the former Union finance minister said at a press conference here.If RBI Governor Urjit Patel stands his ground, the Centre is planning to issue a direction under Section 7 of the RBI Act, 1934, directing the apex bank to transfer Rs 1 lakh crore to the government’s account, he claimed.Section 7 of the RBI Act gives special powers to the government to issue directions to the RBI governor on issues of public interest. Chidambaram alleged that the government had packed the central bank’s board with handpicked nominees and was making every attempt to push through its proposals at the RBI board meeting on November 19.
If the RBI either defies the government or the RBI governor resigns, in either events, the consequence will be catastrophic,” he said.