Gist of Editorials: Spelling out the Government’s RBI Windfall | GS – III


Relevance :  GS Paper III


RBI has announced a huge transfer of its  surplus of ₹1.76 lakh crore to the Central government.

Surplus transfer

  • 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.