Former finance minister P. Chidambaram on Thursday alleged an attempt to publicly humiliate Reserve Bank of India governor Urjit Patel as had been done to his predecessor Raghuram Rajan.
“(RSS affiliate) Swadeshi Jagran Manch almost said that the RBI governor fall in line or resign. This is the same language used for Rajan. The government is humiliating the RBI governor… not directly but through other outfits,” the senior Congress leader said.
Reports had said that RBI governor Urjit Patel was mulling his resignation after the government had sent three notices threatening to invoke Section 7(1) of the RBI Act, which empowers the Centre to direct the central bank to adopt certain measures on issues of public interest overriding its reservations. The reports prompted the Centre on Wednesday to issue a statement affirming its faith in the RBI’s autonomy.
Manch chief Ashwani Mahajan had on Wednesday said: “The RBI should not see the government’s suggestions negatively and as a curb on its independence…. The independence of the RBI is a farcical and faulty narrative…. The RBI should work in sync with the government. The fact is that the RBI is not accountable to the people of this country, the government is.”
Chidambaram said the invocation of Section 7(1) was a very bad move. “The government is completely misreading Section 7. The power of Section 7 lies in its non-use,” he said. “We have been saying the RBI should have stood up to the government’s pressures. Some of the damage was done to the RBI by the demonetisation.”
Asked about India jumping 23 places in the World Bank’s ease-of-doing-business rankings, he said: “This is based on ten parameters in two cities -– Mumbai and Delhi --- and the study is only about private limited companies. This doesn’t mean that ease of doing business is there in Gorakhpur or Bhubaneswar also.”
Chidambaram said the economy was in crisis. “The government itself concedes there is a crisis of NPAs (non-performing assets), an NBFC (non-banking financial company) crisis, an SME (small and medium enterprises) crisis, a fiscal deficit and a current account deficit crisis,” he said.
