RBI shrugs off Election Commission order on cash, panel says fall in line

The Election Commission and the RBI were embroiled in a rare clash with the EC asserting its constitutional mandate to insist that the central bank enhance the cash withdrawal limit for candidates in forthcoming elections.

The EC took serious exception to RBI’s communication on Friday that it did not think increasing cash withdrawal limit was desirable or possible. “It appears that the RBI had not realised the gravity of the matter,” the EC wrote to the central bank.

Sources in the Commission said the RBI was obliged to accept its instructions to hike the cash withdrawal limit, given the EC’s “absolute powers” under Article 324 of the Constitution to issue such instructions and directions that it deems fit for free and fair conduct of elections. Such powers have been upheld in the past by the Supreme Court, which has refused to intervene in cases questioning EC’s decisions invoking Article 324.

Stating that RBI seemed to have dealt with the matter in a cursory manner, the EC communication said, “It is reiterated that it is the constitutional mandate of the ECI to conduct free and fair elections and provide a level playing ground to all candidates. ECI had desired that current limit on cash withdrawal for candidates for the forthcoming elections may be enhanced in order to ensure that candidates are able to defray election expenses up to statutory limits.”

As time runs out for contestants in Goa and Punjab where polling is due on February 4, the poll panel has asked RBI to act on its directive “at the earliest”. Political circles were surprised at the unexpected showdown, pointing out that EC’s powers in the conduct of elections were well delineated and that cash limit was a practical problem faced by all candidates.

The commission, in its January 24 letter, had urged RBI that current limit on cash withdrawal for candidates “may be enhanced” to ensure that candidates are able to meet poll expenditure up to the statutory limit. The panel wanted the limit raised to Rs 2 lakh a week. The commission had urged RBI to raise the limit, as certified by the returning officer of a particular constituency, to Rs 2 lakh per week and had said this measure may be in place only till declaration of poll results on March 11.

The stinging letter from the commission to RBI has raised concerns within the government and there is a view that RBI should have been more “mature” in handling the request from the poll panel. A section within the government feels RBI will have to now comply with the constitutional provisions and act swiftly.

The latest letter from the EC comes close on the heels of the poll panel’s displeasure at decisions by some government departments. Concerned at decisions of the ministries of finance and defence besides Niti Aayog that it felt had the potential to “disturb the level playing fields of pollbound states”, the EC had asked the cabinet secretary on Saturday to issue strict instructions to ministries and departments to refer all such matters to the panel for prior clearance.
Reiterating its instructions of March 20, 2014 that require government departments to direct to the commission all references of cabinet through the cabinet secretariat and matters of ministries/departments through the ministry concerned, the EC said it had noted that “in certain cases, the ministries/departments took decisions which have effect of disturbing level playing field in poll-bound states, without referring the matter to the commission, particularly by Niti Aayog, ministry of defence and ministry of finance”.

The EC asked the cabinet secretary to issue necessary instructions to all ministries and departments to strictly adhere to its guidelines and ensure that EC’s concurrence was taken well in time wherever needed.

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