GOVT TRYING TO CAPTURE RBI, ITS CREDIBILITY AT STAKE: CONG

KOLKATA: Coming down heavily on the Narendra Modi government for making efforts to “capture” the Reserve Bank of India, Congress leader and former Union finance minister P Chidambaram on Thursday said the chain of events could “irretrievably damage” the credibility and reputation of the central bank.

Chidambaram alleged the Modi government demanded ~1 lakh crore from the reserves of the RBI in desperation as it wants money to “step up expenditure in an election year” and found all other “avenues closed”.

Speaking to reporters in Kolkata, Chidamabaram said in such a situation, the RBI governor has only two options: “One, to transfer the money, or two, resign.

“In my view, whichever option is taken by the governor, it will irretrievably damage the credibility and reputation of the RBI. It will also mean capture of the RBI by the government. One more crucial institution will fall from grace,” he said.

He also took on the BJP over the results of the bypolls to three Lok Sabha and two assembly seats in Karnataka (the alliance of the Congress and JDS won four of them) to say that the results provide a “clear indication” that statewise coalitions will benefit the Congress in the general elections next year.

He linked the reverses the ruling party at the Centre has suffered in the bypolls to the demonetisation, which, he argued, contributed to job losses and slow pace of growth in the economy.

“From the experience of Karnataka bypoll, my own view is that statewise coalition will benefit the Congress. In Karnataka the experiment yielded results.”

Lashing out at the decision to demonetise currency notes of ~500 and ~1,000, he said, “Almost 99% of the demonetised notes returned to the Reserve Bank of India. But as a result of it, GST (goods and services tax) collection went down, unemployment rose and more than 100 people died in the queues.