RBI has tripled the withdrawal limit from RBI in the midst of the ongoing fight against the Corona virus and the lockdown, besides pulling out a huge amount of money from the central bank.
With the nationwide lockdown and increasing number of people infected with the corona virus, the central government has implemented a plan to evacuate the Reserve Bank of India. Government has amended the rules for taking loans from RBI, after which Reserve Bank has increased the loan amount given to the central government by almost three times to 2 lakh crore on April 20. Earlier this limit was 75,000 crores.
Even before the Corona epidemic, the Narendra Modi government at the Center is failing on the economic front. Indian economy has already reached a trough after the failed polices of demonetisation and GST. There had been various reasons to say so. Rupee is trading lower and lower, businesses are stagnating, many banks are on the verge of collapsing. As per economists, the withdrawal limit increase can lead the country reach the pit of Great Depression under such circumstances.
RBI has always been giving only surplus funds to the government. But this is the first time during the tenure of the Modi government, the government is doing things like withdrawing more money from the surplus. And under this, rules have been amended to get maximum amount from RBI.
Earlier the government could take only 75 thousand crores as a loan from the Reserve Bank, but the current government revised it on 1 April 2020 and raised the withdrawal limit to 1 lakh 20 thousand crores and now on 20 April 2020 it Has again increased to 2 lakh crores.
There was all-round criticism from the RBI of giving 1.75 lakh crores to the government and the move was termed as an issue of RBI’s autonomy. At the same time, many big RBI officials including RBI Governor Urjit Patel resigned. Vivek Dahejia, Professor of Economics at Carlton University, Canada, wrote in a report published in that period in the Financial Times that the RBI was losing its executive autonomy and becoming a means to fulfill the government’s greed.
Now that the government has prepared a new scheme to withdraw maximum amount from the RBI, should we now assume that the autonomy of the country’s central bank has ended? If this is the case, then there are indications that the situation of financial emergency has been created in the country.
The question should arise, what is the need for the government to withdraw such huge amount from the Reserve Bank? Suppose the country is moving towards financial emergency for the first time and this step taken by the government in collaboration with RBI is a call for this emergency?rbi