P Chidambaram during a press conference in Guwahati
NEWS

Govt-RBI standoff to have disastrous consequences: PC

P Chidambaram accused the Bharatiya Janata Party (BJP) of trying to capture the crucial institutions of Indian, including the RBI to gain their vested political interest.

Guwahati: Former union finance minister P Chidambaram warned of an economic disaster owing to the ongoing standoff between the Central government and Reserve Bank of India (RBI).

Chidambaram accused the Bharatiya Janata Party (BJP) of capturing the crucial institutions of Indian, of which the latest target is the RBI. Speaking about the disagreement between RBI Governor Urjit Patel and the government, the former finance minister said, “The immediate goal of the government is to lay its hands on the reserves of RBI and an appropriate sum of Rs 1 lakh crore to meet its financial deficit target and increase spending in an election year.”

Speaking about the “unprecedented” move by the BJP government of invoking Section 7 of the RBI Act, the former minister said that the government may overrun the RBI Governor through the Board of Directors as the Board is to meet on November 19 this year. Chidambaram said, “The governor (of Central bank) has a mentor policy committee to advise him on interest rates. RBI is not a ‘limited’ company, the Board does not have operational responsibility, but the government appointing its own people to control the RBI.”

Launching a scathing attack on the government, the former finance minister, who is also an economist, further said, “Since 2013-2014 the government taking 99.99% of RBI’s annual profit. This government also wants to capture the reserves of the RBI. The government wants a portion of Rs 7-10 lakh crore of RBI reserve which no government asked till date.”

The former finance minister also attacked the government for changing Centre-State ratio as per the special category states in context to northeastern states. As per the 2010 Special State Category, the Centre provides 90% for any Central project and the State share remains 10% for proper implementation of the project.

“However the NDA government changed the shares to 70:30 in some cases and 60:40 in some other cases as the government doesn’t have resources to give the Central share,” said the former finance minister.

Chidambaram, who is in Guwahati on Friday, will also take part in a manifesto consultation meet for the upcoming Lok Sabha elections for the Congress party.