New Delhi, Oct 31: In light of reports of Government’s interference in the RBI, the Union Finance Ministry on Wednesday made it clear that both the Centre and the Central Bank’s functioning should be in public interest and for progress of the Indian economy,Govt respects RBI autonomy.
The Ministry said the Government and the RBI along with economic regulators have been holding consultations on several issues from time to time. The Government through these consultations has suggested possible solutions and would do in future as well.
For the purpose, extensive consultations on several issues take place between the Government and the RBI from time to time.This is equally true of all other regulators.
Government of India has never made public the subject matter of those consultations. Only the final decisions taken are communicated. The Government through these consultations, places its assessment on issues and suggests possible solutions. The government will continue to do so,” the Ministry said in a statement here.
The Ministry said the autonomy for the Central Bank within the framework of the RBI Act is an essential and accepted governance requirement. “The Government of India have nurtured and respected this.
The Finance Ministry’s statement came close on the heels of media reports that the Government has invoked the Section 7 of the RBI Act which empowers the government to consult and give instructions to the Governor to act on certain issues that the government considers serious and in public interest.
Earlier in the day, former Finance Minister P Chidambaram tweeted, ‘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. 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 government is hiding facts about the economy and is desperate.’
The Congress had on Tuesday alleged that Finance Minister Arun Jaitley’s statement on the RBI function was an assault on its independence (UNI)
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