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Former Union Finance Minister P Chidambaram has said in a tweet that he is afraid there will be more bad news today as the government has invoked Section 7 of the RBI Act and issued unprecedented ‘directions’ to the RBI. He further said invoking the section means the government is "hiding facts about economy".
"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," Chidambaram tweeted.
This means that the rift between the government and the Reserve Bank of India (RBI) and its Governor Urjit Patel, which has widened since the beginning of the year, has taken a turn for the worse as the former has reportedly invoked Section 7 of the RBI Act.
Read — Govt invokes Section 7, law allowing it to issue directions to RBI: Report
Section 7 of the RBI Act allows the government to issue directions to the governor of the central bank in matters adhering to a public interest.
Chidambaram questioned the government's move to invoke the provision now, claiming that the government is hiding facts about the economy. He recounted previous incidents where rift between the government and the RBI did not lead to invoking Section 7.
"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 the government is hiding facts about the economy and is desperate," Chidambaram tweeted.
In the past few months, the Centre and the RBI have had disagreements over several issues and communication between them has been impaired as a result.
The differences resurfaced on October 26 when RBI Deputy Governor Viral Acharya hinted that the government's interference in the central bank's operations was rising and that there was a need for autonomy.
These reports have triggered questions over RBI Governor Urjit Patel's future at the central bank. There is speculation that he may not get an extension after his three-year term ends in September 2019.
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