The centre had cited a rare law – Section 7 of the RBI Act – to resolve disputes with the bank.
- Finance Ministry denies that RBI was asked to transfer surplus reserves
- Says only proposal was to fix appropriate economic capital framework
- Congress had said yesterday that centre had asked RBI to pay up
There is no proposal from the government to ask the Reserve Bank of India to transfer its surplus reserves, said Subhash Chandra Garg, economic affairs secretary in the finance ministry, in a tweet today. Dismissing reports earlier this week that it was seeking between Rs 1 lakh crore and Rs 3.6 lakh crore from the central bank's reserves, he said the government's fiscal math "is completely on track".
Mr Garg added that the only proposal concerning the reserves that the government was discussing was to fix the appropriate economic capital framework of the RBI. That framework is used to decide the adequate amount of reserves the central bank should maintain.
Lot of misinformed speculation is going around in media. Government's fiscal math is completely on track. There is no proposal to ask RBI to transfer 3.6 or 1 lakh crore, as speculated. (continued…).
– Subhash Chandra Garg (@SecretaryDEA) November 9, 2018
The government and the RBI have been clashing on several issues including the reserves question, and a government proposal to ease the capital and lending curbs for state-run banks.
The rift has widened sharply in the past few weeks and will be taken up at the RBI's forthcoming board meeting on November 19.
Yesterday, former finance minister P Chidambaram said the spat between the government and the RBI was over a huge sum of money the government has demanded from the central bank.
The imposition of a never-before used rule was meant to force the hand of RBI Governor Urjit Patel, to pay Rs 1 lakh crore from the reserves of the Reserve Bank of India, who has refused to pay, he said.
"Hope the Governor stands his ground," Mr Chidambaram said, referring to the scheduled board meeting.
The government, he said, is trying to step up expenditure in an election year despite facing a fiscal deficit.
(With inputs from Reuters)