Abhishek Singhvi: Modi govt’s overtures to pounce on the RBI treasury is Demonetisation Part-II

Abhishek Manu Singhvi, Spokesperson of the AICC, issued a statement slamming PM Narendra Modi for attempting to bring about another demonetisation disaster referred to as Demonetisation Part-2. He stated that the Modi government is coercing the RBI to pay ₹3.6 lakh crore, which amounts to 40% of the reserves that has been accumulated over time.

‘Modi Made Disaster of Demonetisation’ shaved off 1.5% of India’s GDP and severely denigrated the institutional autonomy of the RBI, now PM Modi plans Demonetisation Part -2 that will again shave off 2% of India’s GDP in one shot. According to public information, Modi government is coercing RBI to pay a special dividend of ₹3.6 lakh crore, equal to nearly 40 percent—pause and repeat, 40 percent—of reserves accumulated over decades. This is 2% of India’s GDP, said Singhvi.

“A desperate Modi government wants to grab the family silver of the RBI in order to indulge in pre elections sop-splash!” Singhvi added.

He highlighted the sudden need for the Modi government to procure the amount from the RBI in spite of being in power for the last four years and the last six months. But it has come up with a “cobweb” of narratives which completely disregarded the integrity of the RBI.

In the statement, He claimed that the Modi government is attempting to take away the Contingency Reserve of the RBI to fix the economic capital framework and even forced senior government bureaucrats to tweet wrong data to mislead the people.

He puts across a few facts that the Modi government has been proclaiming and points out the discrepancies of these said facts.

The discrepancies include the following:

• The Fiscal Deficit in FY 2013-14 was not 5.1% but 4.4%.
• Modi government has already consumed 95.3% of the full year Fiscal Deficit target in the first six months of FY 2018-19. Therefore, because of lower than expected indirect tax collection, which is going to reflect badly in the election season; Modi government wants to seize the RBI Cash Reserves and use them as ‘Electoral Lollipop.’
• The Modi government has come up with a “bunkum and bogus argument” to fix the economic capital framework of the RBI.

He asked the Modi government the following questions;

• What is the meaning of "fix appropriate economic capital framework of RBI" which is being discussed by the Government?What is the need of this quick fix solution, which will further deteriorate the contingency stability? How does the Government seek to battle plummeting market confidence which will be a result of using the RBI reserves?
• Modi government has earned a windfall gain of ₹12 Lakh Cr in the past 4 years, with heavy taxation on Petrol-Diesel, where has the money gone? Why does it not use that 12 Lakh Cr to fund its 'electoral lollipops’? Wouldn't this money be used to recapitalize the PSU's & Banks which will only benefit large crony friends of PM Modi?