Topic – Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
4) Discuss how section 7 of RBI act empowers the central government to intervene in the functioning of the RBI. What are the recent issues surrounding the act. Discuss.(250 words)
Why this question
The central government has recently invoked the said act for the first time in the history of 83 years. Although the act has only been invoked upto the consultation stage, it is important to understand the provisions of the act and the controversy surrounding it.
Discuss- this is an all-encompassing directive which mandates us to write in detail about the key demand of the question. we also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.
Key demand of the question.
the question wants us to write in detail about the section 7 of RBI act, how it empowers the central government to intervene in RBI’s functioning. It then wants us to write in detail about the controversy surrounding the said act.
Structure of the answer
Introduction– write a few introductory lines about the recent invocation of sec 7 of RBI act by the government.
- Discuss the provisions of the sec 7 of the RBI act. E.g Section 7 pertains to management. “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,” says Section 7(1) of the RBI Act, 1934; Further, Section 7 (2) gives the government powers to entrust the running of the RBI to its Central Board of Directors.; Subject to any such directions, the general superintendence and direction of the affairs and business of the Bank shall be entrusted to a Central Board of Directors which may exercise all powers and do all acts and things which may be exercised or done by the Bank,”
- Discuss the recent controversy surrounding the act. Briefly discuss the differences between the govt. and the RBI over which such act may be invoked.
Conclusion– based on your discussion, form a fair and a balanced conclusion on the given issue.