Palaniappan Chidambaram at the Annual Bankers’ Conference in Mumbai, India. Photo: Dhiraj Singh/Bloomberg 

Government Vs RBI: Modi Government Trying To Capture RBI, Says Chidambaram

Senior Congress leader and former Finance Minister 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".

He alleged that the government has 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 Nov. 19.

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.
P Chidambaram, Former Finance Minister

Also read: Why The Government Thinks The RBI Has Rs 3.6 Lakh Crore In Excess Capital

If RBI Governor Urjit Patel stands his ground, the Centre was 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.

"The day of reckoning is Nov. 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.

Also read: Government To Continue Pressing RBI For Relaxing Norms, Funds