On RBI, Congress asks Modi govt to learn from Argentina's experience

Reminds PM of the time the Latin American country's govt resorted to raiding the reserves of its central bank, and triggered a collapse of its economy

The Congress on Tuesday cautioned the Narendra Modi government to learn from Argentina’s experience of 2008-2014 when the Latin American country’s government resorted to raiding the reserves of its central bank, triggering a collapse of its economy.

A day after the Reserve Bank of India (RBI) approved transfer of Rs 1.76 trillion dividend and surplus reserves to the Centre, Congress leader and former union minister Anand Sharma called the government’s decision "catastrophic". He said the Modi government would do well to learn from the Argentine experience of some years back when its government forced that country’s central bank to transfer its reserves, which eventually caused the collapse of its economy. He said the government was pushing India’s economy towards bankruptcy and an economic emergency. In 2009, Argentina's government of the day sacked the chief of its central bank and used its reserve funds.

The Communist Party of India (Marxist) politburo issued a statement criticising the manner in which RBI reserves were being utilised. It asked all party units in the country to organise protests against this "merciless assault" on the economy and people's livelihood.

Earlier in the day, Congress leader Rahul Gandhi tweeted that the prime minister and finance minister “are clueless about how to solve their self-created economic disaster". 

“Stealing from the RBI won’t work – it’s like stealing a Band-Aid from the dispensary and sticking it on a gunshot wound,” Gandhi said.

Congress spokesperson Randeep Singh Surjewala said the Modi government has “converted the ‘R’ in RBI from ‘Reserve’ to ‘Ravaged’!” “The contingency reserve of the RBI meant for extreme financial emergencies and war like situations is being used by the BJP government to bury its monumental mess on economic front! The BJP has finished RBI’s credibility,” Surjewala said.

Congress leader Jairam Ramesh tweeted that former RBI governor Urjit Patel and former deputy governor Viral Acharya “held the fort”, but “were forced to leave” and “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.

Sharma demanded that the government brings out a white paper on the state of Indian economy within a week and release data on projects underway, investments in public and private sectors together with the actual factory output.

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.

The Congress leader pointed to the “discrepancies” in the union budget and the Economic Survey on revenue, and said the government has now sought to bridge this revenue shortfall by raiding the RBI reserved. He said the Bimal Jalan Committee had earlier said the amount will be transferred to the government in instalments over a period of 4-5 years. "Instead, it was given in one go. This confirms India's deep economic and financial crisis," he said.

CPI (M) chief Sitaram Yechury said that since 2014, the Modi government has appropriated 99 per cent of RBI's profits every year to fund its propaganda campaigns. “It has now siphoned off Rs 1.76 lakh crores ostensibly to recapitalise banks which have been looted by Modi's cronies,” he said.

"The health of our leading navaratnas in the public sector is badly damaged by both, falling demand and because of the financial burden imposed on them by the govt. siphoning off huge dividends. All sections, farmers, workers, MSMEs, youth and women workers have been hurt badly," Yechury said in a tweet.

Surjewala asked whether it was a sheer coincidence that the Rs 1.76 trillion borrowed by RBI matches with the 'Missing' amount in the Budget Calculations. “Is this fiscal prudence or fiscal hara-kiri? Will this Rs 1.76 lakh crore (Rs 1.76 trillion) be used to save BJP's crony friends," he asked.