Letter to BS: Invoking Section 7 of RBI Act by govt has come under scrutiny

This refers to “Who benefits from Section 7?” (November 7). Invoking Section 7 of the RBI Act by the government has come under much scrutiny. It has been rightly pointed out in the article that the insertion of Section 7 in the RBI Act was primarily meant to hold the government accountable in case certain decisions are imposed on the Reserve Bank of India (RBI) contrary to its conviction. To my mind, Section 7 should be like nuclear deterrence whose best use is when it is not used. The mere presence of deterrence should serve the purpose. It is desired that the government must hold regular interactions with the RBI without actually resorting to Section 7. Issuing a directive under Section 7 may serve the intended purpose in the short run, but it may unnerve the investors around the world. It is always beneficial not to put hands on a nuclear button and just let the deterrence work.

Sanjeev Kumar Singh  Jabalpur

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