‘Lower RBI dividend not unexpected’

If a state expects its citizens to follow rules, it should tell the rules clearly, says Principal Economic Advisor SANJEEV SANYAL, days after the release of the second volume of the Economic Survey. In an interview to Dilasha Seth, he talks about the proposed Transparency of Rules Act and the Reserve Bank of India’s (RBI’s) monetary policy, among other issues. Edited excerpts: compensated? Homebuyers were affected from Day One. Now we are trying to fix it for them. They wouldn’t have got the possession anyway. The existing set up was not working. It is a bankrupt company. Some deal can be struck between the government and the banks and the house buyers. Why should the promoters be involved in the discussion? They have gone bust, so they should leave. The houses are still there half-built etc, so they may be auctioned or given to investors. The points made in the Survey over the inflation targeting by the Reserve Bank of India appear to be quite scathing? Our view has been for a while that there are deflationary pressures in the system and the RBI should take that into account. When inflation is down from seven-eight per cent to just over one per cent, shouldn’t rates come down commensurately? But very low rates do not necessarily spur investments. Right? Sure. But a lower rate does not hurt. It is definitely not a sufficient condition but may be a necessary condition for investments. Demonetisation led to lowering of dividend by the RBI to the government by half. Will it impact the Centre’s fiscal health? I do not think there will be an impact. The numbers are not entirely unexpected. It is a one-time adjustment anyway. Fiscal deficit will remain within the range. It was already anticipated that there will be a shock like this. Besides, the RBI hasn’t finished counting yet, so we still need to know details.