The Reserve Bank (RBI) resisted a "raid" planned by some in the government to extract ₹2-3 lakh crore from its balance sheet in 2018 to meet populist spending in run-up to general elections, Viral Acharya, who was deputy governor at RBI at that time, has written.
This apparently had led to differences between RBI and the government, which even contemplated invoking never-used Section 7 of the Reserve Bank of India Act to issue directions to the central bank.
Mr. Acharya who had first flagged the issue while delivering AD Shroff Memorial Lecture on October 26, 2018, in a fresh prelude to his book 'Quest for Restoring Financial Stability in India', called the exercise a "backdoor monetisation of the fiscal deficit by the central bank".
