The surge is a two-year high and gives the government the device to parade an economic rebound before general elections next year. But aside the drum beat of praise one may well ask if the economy is really recharged?
The meetings came amid a face-off between the central bank and the finance ministry over issues ranging from appropriate size of reserves that RBI must maintain to ease of lending norms to step up growth in an election year.
The Finance Minister said that Demonetisation had resulted in “more formalisation (of economy), more revenue, more resources for the poor, better infrastructure, and a better quality of life for our citizens.”
The former Prime Minister also asked the current NDA regime not to indulge in any further unorthodox, short-term economic measures that could cause any more uncertainty in the economy and financial markets.
Chidambaram said that the governments he was a part of in the past had never used Section 7 of the RBI Act of 1934, under which a direct order can be issued by the government to the central bank to carry out its wishes in "public interest".