Govt invokes never-used-before Section 7 to make RBI fall in line

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The government has invoked Section 7 of the Reserve Bank of India (RBI) Act. The letter invoking Section 7 was sent to the RBI last week, sources confirmed to India Today TV.Section 7 of the RBI Act empowers the government to issue directions necessary for public interest to the RBI from time to time after consultation with the RBI governor.”The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public inter­est,” Section 7(1) of the RBI Act reads.The section has never been invoked before in the history of independent India.Read | What is section 7 of the RBI Act?According to media reports, Urjit Patel is considering resigning as RBI governor. Former Finance Minister Yashwant Sinha told IndiaToday.in that if RBI governor has any self-respect, then he should resign. He also said that Finance Minister Arun Jaitley has ruined the economy and the institution.Calling it a direct attack on the autonomy of the RBI, Sinha said, “I would only say that this [invoking Section 7] is unprecedented. it has never happened in the history of independent India or ever since RBI was established. Clearly, there is a crisis in our economy the RBI might have one view of how it should tackle the crisis the finance ministry may have another view.”(With inputs from Ashutosh Mishra)Also Read | Urjit Patel considering resigning as RBI governor after rift with govt: ReportAlso Read | Why RBI and government are fighting
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