Relevance : GS Paper III
RBI has announced a huge transfer of its surplus of ₹1.76 lakh crore to the Central government.
- The transfer of RBI surplus to the government occurs every year.
- This augments the non-tax revenue of the Central government.
- But this year is an exception as RBI has announced a huge transfer of of ₹1.76 lakh crore.
Arguments against the surplus
- If the economy faces a crisis, the RBI may not have adequate money to protect it.
- It denotes an erosion of the RBI’s independence.
Arguments in favour of surplus
- With transfer, the idle cash with RBI can be utilised more productively.
- Transfer occurred after following due process and after accepting the recommendations of the Jalan Committee.
- Transfer could enable the government to go in for bank recapitalisation in a big way.
- The transfer could enable the government to stimulate the economy while maintaining budget discipline.