Cash withdrawal limits irk India’s Election Commission…

We wish governments to stay away from central banking operations. But we should expect the same from the central bank as well especially on election matters. There is research which showing how central bank stances during elections leads some governments coming to power and others being voted out.

Election Commission of India is not just irked by the low cash withdrawal limits but also by the attitude of Indian Central bank:

Election Commission (EC) on Saturday repeated its demand that the Reserve Bank of India increase cash withdrawal limits for candidates contesting the Assembly polls, after the central bank declined to do so on Friday.

“It is re-iterated that that it is the constitutional mandate of the ECI (Election Commission of India) to conduct free and fair elections and to provide (a) level playing field to all candidates. In order to facilitate proper conduct of elections, it is imperative that directions issued by the commission are complied with,” Dilip Sharma, Director General (Election Expenditure) wrote in a letter to RBI Governor Urijit Patel.

Sharma said “it appears the Reserve Bank of India has not realized the gravity of the matter,” and urged it to reconsider the EC’s proposal.


Although candidates use cheques for a part of their poll expenses, they need cash for petty expenses, the EC explained. As well, rural areas present an especially tricky challenge, since there few or no banking facilities, the Commission added.

It reminded the central bank that candidates contesting Assembly polls in Uttar Pradesh, Uttarakhand and Punjab can spend upto Rs 28 lakh each for electioneering. The limit in Goa and Manipur is Rs 20 lakh. Given the current weekly withdrawal limit, a candidate will only be able to get a maximum of Rs 96,000 in cash during the three-to-four week election period, the EC said.
Just keeps getting worse for the Indian central bank. It has faced a lot of brickbats already. However, by disallowing election candidates from withdrawing cash it is getting into dangerous political games. It should get out of them as early as possible. But then can it be selective and allow just election candidates to withdraw higher cash amounts?

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