Govt wants 1 lakh crore from RBI, Nov 19 is day of reck­on­ing: Chi­dambaram

The Northlines - - NATION -

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”, re­ports PTI

“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 fi­nance min­is­ter said at a press con­fer­ence. He said the Cen­tre is plan­ning to is­sue a di­rec­tion un­der Sec­tion 7 of the RBI Act, 1934, di­rect­ing the cen­tral bank to trans­fer Rs 1 lakh crore to the gov­ern­ment’s ac­count. “The day of reck­on­ing is Novem­ber 19 when the RBI board is sched­uled to meet. The gov­ern­ment has packed the RBI board with its hand­picked nom­i­nees and is mak­ing every at­tempt to ram through its pro­posal at the meet­ing,” Chi­dambaram said, ac­cord­ing to PTI.

“If the RBI ei­ther de­fies the gov­ern­ment or RBI gover­nor re­signs, in ei­ther events, the con­se­quence will be cat­a­strophic,” he added. Though dif­fer­ences be­tween the gov­ern­ment and RBI have peaked this year over a num­ber of is­sues, in­clud­ing the cen­tral bank’s han­dling of the Ni­rav Modi cri­sis and the lat­ter’s firm stand on bring­ing weak banks un­der prompt cor­rec­tive ac­tion, the lat­est rea­son for the es­ca­la­tion is the liq­uid­ity cri­sis be­ing faced by Non Bank­ing Fi­nan­cial Com­pany ( NBFCS).

While NBFCS have ap­proached the gov­ern­ment com­plain­ing of a liq­uid­ity crunch and are seek­ing gov­ern­ment sup­port, the cen­tral bank is of the view that there is no liq­uid­ity prob­lem, ac­cord­ing to Livemint.

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