RBI Vs EC: This Wasn’t The Right Issue For Urjit Patel To Assert Autonomy 

The Reserve Bank of India (RBI) appears to have chosen the wrong institution to fight on the issue of autonomy. A few days ago, the Election Commission (EC) asked the central bank to enhance cash withdrawal limits for candidates in the five states that go to the polls from 4 February.

The RBI under Urjit Patel has been attacked for not asserting itself with the government on demonetisation, but the EC is hardly the institution to test its assertiveness with. Following the EC missive in relaxing cash limits, the RBI appears to have treated this as a suggestion and declined to relax the withdrawal limit from Rs 24,000 a week to Rs 2 lakh, making the EC apoplectic. It has warned the RBI to ease the restriction “at the earliest” and rapped the bank on the knuckle for treating its request “cursorily”.

The EC may or may not be right in presuming that candidates need more hard cash for electioneering, but its right to take this call is unquestionable. The Constitution gives the EC quasi-judicial powers during election time, and this power has been repeatedly affirmed in several cases that went to the Supreme Court. It does not make sense for the RBI to assert its autonomy at the wrong time on the wrong issue.

Some newspapers have wrongly billed the RBI versus EC conflict as the clash of one institution’s autonomy with that of another, but this is off the mark. The RBI’s autonomy is not a constitutional mandate, but one acquired through practice and convention. The RBI Act, in fact, specifically says that 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.”

On the other hand, the EC’s mandate flows directly from the Constitution, and Article 324 clearly says “that the superintendence, direction and control of the preparation of electoral rolls… and the conduct of all elections to parliament and to the legislature of every state… vests with the Commission.” In fact, once appointed, election commissioners cannot be removed except through impeachment by parliament – exactly as in the case of Supreme Court judges. However, election commissioners can be removed on the recommendation of the Chief Election Commissioner (CEC). The CEC is thus all-powerful. The government has control only over the appointment of election commissioners; after that it can do little.

The EC enjoys a wide mandate during election-time and this includes the right to move government officials and police officers at will. No government can countermand its orders for the duration of elections.

It is thus surprising that the RBI failed to note this. At best, it could have sought clarifications from the EC on the way the cash withdrawal limits were to be eased, and explained its difficulties, assuming it had some.

In the past, politicians have complained bitterly about the EC’s decisions, including Trinamool Congress chief Mamata Banerjee, during the conduct of the last West Bengal assembly elections. When the EC issued a show cause to her for poll code violations, she talked defiantly, but in the end the EC got her to eat crow. She had to comply with its orders.

In the cash withdrawal case, the RBI’s foot-dragging will be seen as defiance by the government itself, since it is the one with the powers to direct the RBI to comply on matters of public interest.