Former Union Finance Minister and senior Congress leader P Chidambaram Thursday said the RBI Governor has only two options before him — to transfer the Rs 1 lakh crore requested by the Union Government, or to resign — both of which he said will lead to a “catastrophe for the country.’’
Attending the Congress’s second manifesto meeting in Kolkata, Chidambaram said it was the government’s demonetisation move that has led to its present run in with the RBI.
“The government stares at a fiscal deficit crisis. The GST collections are short of estimates. The net direct tax collection is far short of the budget estimates. Therefore, as things stand today, the government will not be able to meet the fiscal deficit charge of 3.3 per cent in 2018-19. Besides, the government wants money to step up the expenditure in an election year. Finding all their avenues closed, in desperation, the government demanded Rs 1 lakh crore from the reserves of the RBI. When the RBI Governor refused to oblige, the government took the extraordinary and unprecedented step of invoking Section 7 of the RBI Act,” he said.
“If the Governor stands his ground, the government is planning a direction under Section 7 directing the RBI to transfer Rs 1 lakh crore to the government’s account. In the event this should happen, the Governor has only two choices — to transfer the money or to resign. In my view, whichever option is taken by the Governor, it will irretrievably damage the credibility and reputation of the RBI. It will also mean the capture of the RBI by the government. One more crucial institution will fall from grace,’’ he added.