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Congress asks Jaitley to spell out emergency for using never-used Section 7 of 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.


Congress asks Jaitley to spell out emergency for using never-used Section 7 of RBI Act
The Congress leader said a Parliament Act is implemented with judiciousness and maturity, which "is completely missing in this government". (Image Credit: Twitter)

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 hell-bent upon "destroying" every institution on which India stands.

Congress chief Rahul Gandhi said, "the systematic destruction of India's institutions is nothing short of treason".

Without directly mentioning the RBI, Gandhi said, "Ironic that a statue of Sardar Patel is being inaugurated, but every institution he helped build is being smashed."

"We would like to ask the Finance Minister that what is the over-riding emergency that is impelling you to absolutely play havoc with the autonomy of the Reserve Bank of India.

"What is the over-riding emergency which is impelling this Government to take recourse ostensibly to Section 7. We have not heard any explanation from the Government so far," Congress spokesperson Manish Tewari told reporters.

Former finance minister P Chidambaram claimed that the NDA dispensation is "hiding facts" about the economy and is "desperate".

"We did not invoke Section 7 in 1991 or 1997 or 2008 or 2013. What is the need to invoke the provision now? It shows that the government is hiding facts about the economy and is desperate (sic)," he tweeted.

Congress leader Anand Sharma alleged that in its dying days, the government has embarked on a mission to "destroy institutional framework painfully built over decades".

"Assault on RBI autonomy by a reckless government is disturbing and deserves to be condemned. PM Modi and FM Jaitley after their monumental mismanagement of Economy are undermining the central Bank which has credibility and people's trust," he said.

Congress treasurer Ahmed Patel said that on Sardar Patel's birth anniversary, "the institutional undermining of the RBI is a betrayal to his legacy."

"Several institutions successive governments helped build over the last 70 yrs are being systematically dismantled by the present government in just 5 years. Their inherent objective is to extinguish any kind of autonomy beyond their realm. The existence of this government is a grave challenge to democracy," he said on Twitter.

Referring to a statement issued by the government, which said extensive consultations on several issues take place between it and the RBI from time to time, Chidambaram said if it contained the truth alone, why was it necessary to issue the statement?

"Obviously, the government has concealed something. The buzz is that government has recently written one or more letters to the RBI. Will government say whether such letters have been written and whether the letters specifically refer to Section 7 of the RBI Act?" he asked.

Chidambaram also said: "If, as reported, Government has invoked Section 7 of the RBI Act and issued unprecedented 'directions' to the RBI, I am afraid there will be more bad news today."

Tewari said, "You are seeing what is happening to the CBI You are seeing as to how the gutting of the CBI has fire-bombed the entire law enforcement and intelligence agencies and now the Prime Minister and the Finance Minister have trained their guns on the Reserve Bank of India."

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, including during the 1991 and 2008 financial crisis and economic meltdown.

The Congress leader said a Parliament Act is implemented with judiciousness and maturity, which "is completely missing in this government".

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 the Section 7 of RBI Act to ask the central bank 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.

(With inputs from agencies.)


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