RBI’s Surplus Transfer To Government Catastrophic, Says Congress
The Reserve Bank of India building in Mumbai. (Photographer: Karen Dias/Bloomberg)

RBI’s Surplus Transfer To Government Catastrophic, Says Congress

Listen to Article

The Congress on Tuesday termed as catastrophic the transfer of RBI’s surplus reserves to the government, and accused the Narendra Modi-led administration of thrusting the Indian economy towards bankruptcy and an economic emergency.

Speaking on the RBI surplus transfer issue, Congress Spokesperson Anand Sharma demanded the government come out a white paper on the state of economy within a week, with data on projects underway, investments in public and private sectors, and the actual factory output.

He also demanded a report on the country's export scenario and the credit offtake by micro, small and medium enterprises, and the agriculture sector within two weeks.

The Reserve Bank of India has transferred a record Rs 1.76 lakh crore in surplus reserves to the government, on the recommendations of a committee set up to ascertain its external capital framework.

“The surplus transfer includes Rs 1,23,414 crore in surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF) adopted at the meeting of the Central Board today,” a statement from the central bank said Monday.

The surplus transfer was finalised in keeping with recommendations of a committee, headed by former RBI governor Bimal Jalan. The RBI central board accepted all the recommendations of the committee, the central board said in its statement.

Also read: RBI Transfer Of Contingency Reserves: Mechanics Of The Transaction

According to Sharma, the difference in revenue between the government budget and the economic survey is Rs 1.7 lakh crore and the dispensation has taken away Rs 1.76 lakh crore from the central bank.

"The government made wrong budget, it's in loss. That's why they snatched RBI's money and pushed the country towards an economic emergency," he said. "It is a catastrophic decision. The government has done it out of sheer desperation. Its follies have brought the Indian economy to ruins.”

Also read: A Rainy-Day Giveaway From India’s Central Bank

Sharma said the Jalan Committee had earlier said the amount will be transferred to the government in instalments over a period of 4-5 years. "Instead, it was given in one go. This confirms India's deep economic and financial crisis," he said.

"No central bank hands over its risk buffer to the government, but the RBI on the recommendations of the Jalan Committee, decided to hand over Rs 1.76 lakh crore to the government in one go,” said Sharma.

"India is in a deep financial crisis. Economy is in shambles, all indicators of development are low. India's GDP (growth) is continuously falling," he said, adding that the government is thrusting the Indian economy into "financial bankruptcy".

Also read: The Transfer Of Surplus Is Not A Raid On RBI’s Balance Sheet, Says Rakesh Mohan

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.