'Why tearing hurry to fix RBI capital framework'

The Congress and the Modi government continued to spar over the latter's reported attempts to control the RBI with former finance minister P Chidambaram questioning the “tearing hurry” to “fix” the capital framework of the central bank.

Chidambaram was responding to the Modi government's claims that its fiscal math was completely on track and that it had forgone Rs 70,000 crore budgeted market borrowing this financial year.

“The government claims that its fiscal math is correct. It boasts that it has given up Rs 70,000 crore of borrowing for 2018-19. If so, why does it need money from the reserves of RBI this year?” Chidambaram asked.

The senior Congress leader said that the NDA government has completed four years and six months of its term and effectively has only four months left.

“What is the tearing hurry to fix the capital framework of RBI?” Chidambaram asked against the backdrop of Economic Affairs Secretary S C Garg's assertion that the government was not seeking transfer of Rs 3.3 lakh crore from the RBI.

Garg had said the government was discussing a proposal to fix appropriate economic capital framework of the RBI.

“If the government does not need any more money this financial year, why is it mounting pressure on the RBI in the last four months of its tenure? Why did it keep silent for four years and six months?” Chidambaram asked.

The RBI has a massive reserve of Rs 9.59 lakh crore, and reports had it that the government wanted the central bank to part with a third of that fund. This transfer of funds along with easing of norms for weak banks and raising liquidity has led to friction between the central bank and the Modi government.

The issues are expected to figure in the RBI Board meeting on November 19, triggering speculation that RBI Governor Urjit Patel may quit if government forced the central bank to accede to its demands.

RBI Deputy Governor Viral Acharya had in a speech last month talked about the independence of the central bank and contended that any compromise could be “potentially catastrophic” for the economy.