RBI's cash transfer decision creates battle between BJP and Congress

Updated: Aug 28, 2019, 12:24 IST | Agencies | New Delhi

Congress accuses Centre of leaving the central bank vulnerable in the current financial crisis by taking its surplus reserves; FM Sitharaman says Oppn party should have consulted its senior leaders before making the allegation

Rahul Gandhi, Congress leader
Rahul Gandhi, Congress leader

New Delhi: The Congress on Tuesday accused the government of pushing the economy towards bankruptcy and an economic emergency, and termed the decision of taking Rs 1.76 lakh crore from RBI reserves "catastrophic".

Several Congress leaders, including Rahul Gandhi and Anand Sharma, mounted the attack against the government's move.

The opposition party's stinging criticism came a day after the Reserve Bank of India approved the transfer of a record Rs 1.76 lakh crore dividend and surplus reserves to the government to provide fresh impetus to the economy without widening fiscal deficit.

"When you strip the RBI of its reserves you're leaving the Reserve Bank vulnerable to a series of disasters. The contingency fund is for emergency situations, not to cover up for the govt's economic failures," the Congress said on its Twitter handle.

Rahul Gandhi said Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman are "clueless" about solving the "self created economic disaster" and accused them of "stealing money" from the bank.

"Stealing from RBI won't work - it's like stealing a Band-Aid from the dispensary and sticking it on a gunshot wound," he said, using the hashtag "RBILooted".

Narsimha Rap
GVL Narasimha Rao, BJP leader

Senior party spokesperson Sharma demanded a white paper from the government on the state of the Indian economy within a week. He added that data on projects underway and investments in public and private sectors together with the actual factory output should be released.

Sharma also demanded a report on the country's export scenario and the credit offtake by Micro, Small and Medium Enterprises (MSMEs), and the agriculture sector within two weeks.

According to him, the difference in revenue between the government budget and economic survey is Rs 1.7 lakh crore and the dispensation has taken away Rs 1.76 lakh crore from the central bank.

"The government made wrong budget, it's in loss. That's why they snatched RBI's money and pushed the country towards an economic emergency," he told reporters.

"It is a catastrophic decision. The government has done it out of sheer desperation. Its follies have brought the Indian economy to ruins," the Congress leader said.

Sharma said the RBI now has no money to tackle any economic eventuality as it cannot go below the benchmark 5.5 per cent reserves, going by the global economic crisis that various countries are faced with.

"India is in a deep financial crisis. The economy is in shambles, all indicators of development are low. India's GDP is continuously falling," he said, lamenting that the government is thrusting India's economy into "financial bankruptcy".

In a separate tweet, Congress chief spokesperson Randeep Surjewala wondered whether the move was "fiscal prudence or fiscal hara-kiri".

Nirmala Sitharaman
Nirmala Sitharaman, FM

He said Modi 2.0 has converted the 'R' in RBI from 'Reserve' to 'Ravaged'.

"Contingency Reserve of RBI meant for extreme financial emergencies and war-like situations is being used by BJP Government to bury its monumental mess on economic front! BJP has finished RBI's credibility!" he said.

"Is it a sheer coincidence that the Rs 1.76 Lakh Crore borrowed by RBI matches with the 'Missing' amount in the Budget Calculations," he asked.

Party leader Jairam Ramesh made a reference to former RBI governor Urjit Patel and deputy governor Viral Acharya to make his point.

"Urjit Patel and Viral Acharya held the fort. They were forced to leave. The fort was breached."

"The Government of India now usurps a huge windfall from the RBI going contrary to what the central bank's own think tank CAFRAL had said. Fiscal breathing space but at what and whose cost?" he tweeted.
His party colleague Abhishek Singhvi also spoke out on the microblogging site.

"Fair Question:If Indian economy is just fine as contended weeks ago by Govt-A. Why the spate of measures to arrest the falling economy? B. Why 1.76 Lac Crore used from RBI? C. Why the denial when all Opposition wanted was an acknowledgement?."

Using wordplay to make his point, spokesperson Sanjay Jha said, "Robbed Bank of India: RBI".

Sharma added that the Jalan Committee had earlier said the amount will be transferred to the government in instalments over a period of four-five years.

"Instead, it was given in one go. This confirms India's deep economic and financial crisis," he said.

He said the government decided that the RBI's excess money, known as Contingency Risk Buffer, be given to it.

"No central bank hands over its risk buffer to the government, but the RBI on the recommendation of the Jalan committee, decided to hand over Rs 1.76 lakh crore to the government in one go."

Finance minister Nirmala Sitharaman on Tuesday strongly reacted to the Congress' allegation of "stealing RBI's reserves", saying she does not care about such charges and the Opposition leader should have spoken to the finance ministers from his party before hurling such charges.

Congress leader Rahul Gandhi earlier in the day hit out at the government over the record cash transfer from the RBI, saying the Prime Minister and the Finance Minister are "clueless" about solving the "self-created economic disaster" and accused them of "stealing money" from the central bank.

"The Congress should have consulted its finance minister and seniors before making these allegations regarding the RBI. Yet, they have become consummate in making such allegations of stealing and I do not want to pay much heed to this," she said told on the sidelines of GST meeting.

The remarks come a day after RBI decided to transfer Rs 1.76 trillion of surpluses to a fund-starved government. Sitharaman also said questioning the credibility of the RBI, which had constituted the Bimal Jalan committee on determining the excess capital, is a "worrying" sign. The committee had eminent people on it and making any allegations like this is "outlandish", Sitharaman said.

"Any suggestion on the credibility of RBI seems a bit outlandish considering the committee was appointed by the RBI itself," she said, adding the government has not decided how to use the windfall from the RBI. According to some experts, government has accounted for Rs 90,000 crore surplus from RBI in the budget and the money can be used to prop up the sagging growth.

Attacking Gandhi, BJP spokesperson GVL Narasimha Rao said, "Rahul Gandhi is obsessed with stealing. That is where his expertise lies and this was visible during the tenure of the Congress-led UPA government. Therefore, many Congress leaders are mired in corruption scandals and the Congress has become synonymous with corruption."
Charging the government with "monumental mismanagement" on economic front, Sharma demanded a white paper from the government on the state of country's economy within a week.

Data on projects underway and investments in public and private sectors together with the actual factory output should also be released, he said and also asked the Centre to come out with a report on the country's export scenario and the credit offtake by Micro, Small and Medium Enterprises, and the agriculture sector within two weeks.

"The decision will have catastrophic consequences. It is very clear that the Centre has done it out of sheer desperation," Sharma said.

'Govt appropriated 99% of RBI's profits'

CPI(M) general secretary Sitaram Yechury on Tuesday alleged that the Centre had "appropriated" 99 per cent of RBI profits since 2014. "Since 2014, the NDA has appropriated 99 per cent of RBI's profits every year to fund its propaganda campaigns. It has now siphoned off R1.76 lakh crore ostensibly to recapitalise banks which have been looted by Modi's cronies. Farmers, workers, MSMEs, youth and women workers have been hurt badly by the financial crisis," he said.

Rs 1.76l-cr
Amount RBI is transferring to Centre

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