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What is the overriding emergency, asks Cong on govt citing never-used clause of RBI Act

PTI new delhi India
Updated: 31-10-2018 18:23 IST

The Congress on Wednesday asked Finance Minister Arun Jaitley to spell out the emergency which is making the government "take recourse ostensibly" to the never-used Section 7 of the RBI Act.

The provision empowers the government to issue directions to the Reserve Bank of India after consultation with the RBI Governor on issues that it considers serious and of public interest. This section has never been invoked before.

Slamming the government over the issue, the Congress alleged that the BJP dispensation is "hiding facts" about the economy and is "desperate".

Congress spokesperson Manish Tewari alleged that the NDA-BJP government is hell-bent upon "destroying" every institution on which India stands.

"We have seen this in case of CBI and now the prime minister and the finance minister have trained their guns on the RBI," he alleged.

"We would like to ask the finance minister what is the overriding emergency which is making this government take recourse ostensibly to Section 7 of RBI Act? We have not heard any explanation from the government so far," he said.

The Congress leader said the purpose of Section 7 of RBI Act is to ensure that in case there is an acute financial exigency which entails an overriding public interest then the government can issue directions to the central bank.

In seven decades of India's independence, this Section 7 was never invoked, he said.

Taking on the government over the issue, former finance minister P Chidambaram tweeted, "What is the need to invoke the provision now? It shows that government is hiding facts about the economy and is desperate (sic)."

Tewari alleged that under this government there was "anarchy" and a "civil war" within it. "There is nothing in the name of governance in this country," he said.

The government has for the first time ever used a provision of law to ask the RBI for resolution of differences between them on stressed loans in power sector and other issues, sources privy to the development said.

Without acknowledging the notices sent to RBI under Section 7 of the RBI Act, the finance ministry in a statement said autonomy was "essential" but its functioning must be guided by public interest and needs of the economy.

This came amid a standoff between the finance ministry and the RBI over the central bank's handling of weak public sector banks, tight liquidity in the market and ways of resolving bad loans in the power sector.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)