Published: Sat, November 10, 2018
Finance | By Loren Pratt

No Proposal From Government Seeking RBI's Surplus Reserves: Top Official

No Proposal From Government Seeking RBI's Surplus Reserves: Top Official

Government's fiscal math is completely on track.

The Act would have to be amended for the RBI to start transferring its surplus from previous years to the government, Malegam told CNBC-TV18 in an interview, as it only provides that all of the central bank's surplus in a year, after provisions, should be transferred.

"If the RBI either defies the government or the RBI governor resigns, in either events, the effect will be catastrophic", he said.

Kolkata: Senior Congress leader P Chidambaram on Thursday accused the Narendra Modi government of trying to capture the Reserve Bank of India (RBI) to tide over its fiscal crisis, warning that any such move would be catastrophic.

"Having adequate reserves to bear any losses that arise from central bank operations and having appropriate rules to allocate profits including rules that govern the accumulation of capital and reserves is considered an important part of central bank's independence from the government", RBI Deputy Governor Viral Acharya said in his 26 October speech that triggered the row.

There have been reports that the Centre has already thrice asked the RBI to transfer Rs 3.6 lakh crore from its reserves. Once this is finalized, excess reserves could be transferred to the government, providing the latter with a fiscal cushion.

The RBI board is likely to discuss capital framework and other issues at its meeting scheduled for November 19. The government wants to step up the expenditure in an election year. There is no proposal to ask the RBI to transfer Rs 3.6 or 1 lakh crore (trillion), as speculated.

"Government's FD (fiscal deficit) in FY 2013-14 was 5.1%". "From 2014-'15 onwards, government has succeeded in bringing it down substantially", he added. We will end the FY 2018-19 with FD of 3.3%.

These are valuation reserves for dealing with volatility in foreign exchange holdings and government securities, asset development reserves for taking care of depreciation and other asset-related costs, and a contingency reserve to take care of any unforeseen emergencies.

A top finance ministry official on Friday put to rest speculation that the Centre was insisting on drawing a larger share of the Reserve Bank of India's reserves than the central bank is willing to part with.

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