BJP government has been destroying each and every institutions of this union brick by brick ever since they entered into the office. Cultural institutions and Educational institutions such as Pune Film Institute, Indian Council of Historical Research, Indian Institute of Advanced Study at Shimla, Indian Council of Historical Research etc, bureaucratic institutions, Economic institutions, nothing has been left out in this hunt.
The government uses two kinds of arms in this mission, one by penetrating the RSS-linked persons within the bodies and second by extorting autonomy of those bodies. Every autonomous institution has now become nothing more than a joke. Not so very long ago after the CBI fell as a prey, RBI has become the latest in the snare. The union government has decided to invoke section 7 of the RBI act for the very first time since the act was passed 83 years ago.
The three key issues that are made subject to the discussions are exempting power companies from 12 February circular issued by RBI regarding regulations over non-performing loans, solving the liquidity crisis, withdrawal of Prompt Corrective Action for Public Sector Banks. The tussle between the government and the RBI is over these three issues of which the government has reportedly issued letters separately [approximately in the last two months] to the RBI governor seeking his comment over it by using Section 7 of RBI Act.
Section 7(1) of RBI act says, “The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest”.
Section 7(2) talks about the Central Board of Directors which says, “Subject to any such directions, the general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Central Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Bank”.
Section 7(3) deals with the situation that of what happens in the absence of RBI governor, Deputy Governor nominate by him in his behalf shall have the powers.
Section 7 came into the discussion after the Allahabad High Court pointed out that the government could issue directions to RBI under section 7 of RBI Act, in end of August, while hearing the dispute between the Independent Power Producers Association of India and RBI in regard to 12 February circular. [In contrast to what is happening today, the counsel appeared on behalf of the RBI was the one who brought probe regarding section 7 in the court] The government replied by being silent for the question whether the government wants to invoke the Section. However we could clearly see that the government has already initiated the process.
In a recent interview Finance Minister Arun Jaitly has thrashed RBI saying that the RBI has missed to check indiscriminate bank lending which has resulted in the loan crisis. RBI blames the government for the power sector crisis pointing out the policy changes made by the government.
“The government obviously has set its goals for the 2019 general election and it is not helping that small and medium-scale businesses are getting affected due to cash crunch in the banking sector,” a Reserve Bank director told Mumbai Mirror. Liquidation crisis can easily be linked to the effects of demonetisation. Another key issue which is liquidation crisis can easily be linked to the effects of demonetisation.
It is not the first that the tussle between the government and RBI has raised. There always have been the issues between them even in the Congress period over interest rates, loan issues but not to this extend. People have been forced to leave their subsidy right and the gas rate has gone up to 1000 rupees. The big fat Oil Corporates have been given the right to decide the petrol diesel rate everyday and the price is hitting newer high every single day. Both the prices have been increased 13% and 28% respectively.
When the Nirav Modi, Vijay Mallya are flying away with 1000s of crores of looted money from banks, the banks are looting money from the working class-middle class citizens. From April to November 2017, SBI has got profit of Rs. 1,581 crore by collecting non-maintenance fine from the customers after the new minimum balance rules. This amount is half of the whole profit the SBI made between April and September.
While we read the news that all the five richest Indians are from Gujarat, on the other side a report says 1.74 lakh Gujarat anganwadi kids have severe malnutrition. The government unveils statue of unity for the cost of 3000 Rs. Crore, India is ranked below Bangladesh, Myanmmar and Srilanka in the Global Hunger Interest.
From the above points, it doesn’t seem that the government is doing anything for the ‘public interest’. The government tries to snatch the autonomy body for its own interest in other words for the interest of the Corporates.
Whether CBI or RBI, Judiciary or Educational institutions the democracy of such bodies has to be maintained. Babasahebd Ambedakar, in his book, ‘the problem of the rupee: Its origin and its solution (history of Indian currency & banking)’, expressed his fear of control of the state over monetary policy. He says,
“Now, if it is dangerous to entrust a Government with the power to manage currency, how very dangerous is it to entrust it to the Government of India, which professes to carry out its trust on the basis of doctrines such as these! No one is so ill-instructed in these days as to suppose that these are sound maxims. If security is enough, what need is there for convertibility ? If currency is issued only in response to trade demand, what fear is there of over-issue ? A Government acting on such a principle may well go on indefinitely increasing the currency without remorse. History abounds with instances of ruin caused by the management of currencies on such naive principles as these.”
While discussing the British government’s control over circulation money during the World war 1908, he outrightly embodies the need of independency of the monetary policy, against government’s intervention or control over the monetary policy. For the matter of fact, the RBI itself was established based on the Royal commission report to which Ambedkar’s contribution was huge.
Whether the RBI has to be fully autonomy body without any intervention is again another debatable question. But it has to be a democratic institution is all that matters. Here it is also to be noted that although it seems that the government is invoking the section 7 for the first time, it was Prime Minister Modi after all who appeared on Television in the middle of nowhere and said “We have decided that the Rs. 500 and Rs. 1000 currency notes presently in use will no longer be legal tender from midnight tonight that is 8th November 2016”. While Raguram Rajan, the former RBI Governor who had criticism on the Government over certain issues, he was [in a way] pushed to leave after his term ended. The current RBI Governor Urjit Patel had Prime Minister Modi’s back during the execution of Demonetisation while the former had criticism. Since the current Governor Urjit shows the non-cooperation, he is targeted now.
What Dr. Babasaheb Ambedkar, the person who is known as the architect of the constitution of India, was very much worried about that has become the reality and we are made to live with it.
[R Mohanakrishnan – Freelancer journalist based in Tamil Nadu, holds Under Graduation degree in Journalism. Have worked in print and visual media in Tamil with more than 2 years of experience. Socio-political stories and Human interest stories are interested beats. The above article is first published by CounterCurrents.org.]
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