Congress President Rahul Gandhi on Tuesday released its Lok Sabha election manifesto that promises to "reverse the unwarranted and illegal interference by the BJP government" into the functioning of the Reserve Bank of India (RBI).
"Congress will respect the autonomy of the RBI in matters reserved to the RBI under the Reserve Bank of India Act, 1939, including the formulation of monetary policy," said the manifesto.
However, the RBI Governor shall periodically render an account to a committee of Parliament, the Congress mentioned in its manifesto. It promises that the government will work closely with the RBI to ensure that fiscal policy and monetary policy are aligned to achieve the common goal of growth with price stability.
During the Prime Minister Narendra Modi's five-year tenure, India has witnessed innumerable spats between the banking regulator and the government of India. The breakdown of trust and the turf war between the two came out in public after RBI Deputy Governor Viral Acharya warned the government of catastrophic consequences if RBI's independence was curbed. Having clashed with the government over policy issues, former RBI Governor Urjit Patel resigned on December 10, 2018 and was swiftly replaced by a former finance ministry official, Shaktikanta Das.
The issues include relaxation in prompt corrective action, transfer of surplus capital, restructuring scheme for MSMEs, lower capital adequacy ratio for banks, liquidity support to NBFCs and making RBI board more operational and participative in making decisions.
Meanwhile, the Congress in its manifesto promised to work closely with the RBI, re-start the process of credit delivery and "ensure sufficient liquidity" and cash in circulation.
"Every sector of the economy needs credit. A robust and healthy banking system, supplemented by non-banking finance companies, is critical to delivery of credit," the Congress said in its manifesto.
While the RBI is the regulator of banks and NBFCs, the government has the responsibility to ensure that there is adequate liquidity, cash in circulation and flow of credit, the Congress party said.
Slamming ruling NDA government for denying "adequate credit to MSMEs", the Congress said that they created the NPA scare that brought lending to a virtual halt, adding that a one-size-fits-all approach drove companies into insolvency.
The Congress party said that the government had shut out all sources of informal credit. The result is that the agriculture sector is in acute distress, MSMEs are shut or struggling to survive, trade is paralysed, and the volume of merchandise exports is flat for 4 years, it said.
MSMEs were badly hit by demonetisation and a flawed GST, said the manifesto. The Congress promises to devise a "rehabilitation plan for MSMEs" that were severely affected and help them revive and grow.
Edited by Chitranjan Kumar