Modi Government Trying to 'Capture RBI' Ahead of 2019 Lok Sabha Elections, This Will Be 'Catastrophic': P Chidambaram
File image of former Finance Minister P Chidambaram | (Photo Credits: PTI)

New Delhi, November 8: Former finance minister P Chidambaram on Wednesday accused the Narendra Modi-led government at the Centre of attempting to "capture" the Reserve Bank of India ahead of the upcoming Lok Sabha elections in first half of 2019. The purported move will have "catastrophic" consequences, Chidambaram warned.

"Modi government is trying to capture the RBI to access funds ahead of the parliamentary polls," the Congress veteran said, alleging that the Centre requires an unprecedented amount to boost populism through an increase in public expenditure. RBI Act Section 7 Explained: What is the Provision 'Invoked' For 1st Time by Govt Amid Feud With Central Bank.

Lauding RBI Governor Urjit Patel, Chidambaram said he has stood his ground so far. But on November 19, he may be left with only two options: either to accept the government's demand or submit his resignation, he added.

"November 19 is the day of reckoning," Chidambaram reiterated, claiming that the Governor will then be unable to maintain his autonomy as the Finance Ministry has invoked the "never-used-before" provision under Section 7 of the RBI Act.

Under this provision, the central bank has to accept the directions issued by the government, after consultation with the Governor.

Chidambaram's tirade against the Centre came hours after former prime minister Manmohan Singh lambasted the government over the demonetisation drive -- implemented on this day two years ago.

"It’s often said that time is a great healer. But unfortunately, in case of demonetisation, the scars and wounds of demonetisation are only getting more visible with time," Singh said as the Congress is observing a "black day" today.

Finance Minister Arun Jaitley penned a blog to counter the Opposition's criticism of the demonetisation drive. Describing it as a necessary policy measure, Jaitley said no other order could had achieved formalisation of the economy as compared to the demonetisation drive. "The goal was not the confiscation of cash," he stressed.