How will they get the money if they don't do it now?

Everybody is expecting a bad tempered meeting of the board of the Reserve Bank of India (RBI) on 19 November. "In case discussions between the government and the RBI break down, the government may choose to invoke Section 7 of the RBI Act and at least four of the 11 independent directors of the central bank could move a no-confidence motion against Acharya for publicly airing his views protesting government interference," said a person who wanted to remain anonymous. His crime? In a speech last month he warned against interfering with independence of the central bank, citing Argentina as an example where the previous president Cristina Fernandez used central bank reserves to prop up the peso. Argentina is having to borrow from the International Monetary Fund and one condition of the loan is independence of the central bank. The government wants to appropriate Rs 3.6 trillion from RBI reserves to be distributed as handouts to win general elections in May 2019. These reserves have been collected over decades and during tenure of many governments so there is no reason why this government should be allowed to loot the nation's wealth for its own purpose, wrote L Venkatesh. "Why then is the government insistent on going ahead with needling the central bank?" asked M Chakravarty. "The measures smack of desperation. The government seems to be really scared it will lose the general elections." The People's Bank of China is completely controlled by the government but that has not stopped foreign direct investments into the country. China is no comparison because it has a trade surplus of $442.4 billion last year whereas India is expected to have a current account deficit of over 2.8% of GDP this year. India has foreign exchange reserves of $394.5 billion while China has 10 times that amount at $3.12 trillion. If there is a run on the rupee, as happened in 2013, we are in a much better position to defend it because of adequate reserves. Both fiscal and current account deficits are increasing but retail inflation is low because of lower cost of food. Low food inflation may not be such a good thing because it translates to lower earnings for farmers. With more than 50% of the population dependent on agriculture for survival, angry farmers could mean a drubbing at the ballot box. Rising input costs and falling food prices have hit farmers particularly hard. Comparing the RBI with central banks of other nations is foolish because all of them have smaller populations, most of the countries are Western countries with freely traded currencies and countries, such as Russia, Turkey and South Africa, with weak economies. So why is the government playing with fire? Because, while Acharya is a professor at a university in New York where he can return, most politicians have no other outlets and the rewards of winning a election is to get your hands on taxpayer money. So, loot the RBI to loot the taxpayer later. Logical.