‘Govt not seek­ing Rs 3.6 lakh cr re­serve trans­fer from RBI’

The Hitavada - - FRONT PAGE -

CON­FI­DENT of meet­ing fis­cal deficit tar­get, the Gov­ern­ment on Fri­day clar­i­fied it is not seek­ing trans­fer of Rs 3.6 lakh crore re­serves from the RBI and the only pro­posal un­der dis­cus­sion is to fix ap­pro­pri­ate eco­nomic cap­i­tal frame­work of the cen­tral bank.

“Lot of mis­in­formed spec­u­la­tion is go­ing around in me­dia. Gov­ern­ment’s fis­cal math is com­pletely on track. There is no pro­posal to ask RBI to trans­fer Rs 3.6 or 1 lakh crore, as spec­u­lated,” Eco­nomic Af­fairs Sec­re­tary Sub­hash Chan­dra Garg tweeted.

On the fis­cal road map, he said, the Gov­ern­ment will stick to the fis­cal deficit tar­get of 3.3 per cent for the cur­rent fi­nan­cial year. “Gov­ern­ment’s FD (fis­cal deficit) in FY 2013-14 was 5.1%. From 2014-15 on­wards, Gov­ern­ment has suc­ceeded in bring­ing it down sub­stan­tially. We will end the FY 2018-19 with FD of 3.3%. Gov­ern­ment has ac­tu­ally fore­gone 70,000 crore of bud­geted mar­ket bor­row­ing this year,” he said.

Garg fur­ther said the only pro­posal “un­der dis­cus­sion is to fix ap­pro­pri­ate eco­nomic cap­i­tal frame­work of RBI”. The clar­i­fi­ca­tion comes amidst re­port that the Gov­ern­ment is seek­ing trans­fer of at least a third of Re­serve Bank’s Rs 9.6 lakh crore re­serves. Be­sides, it has also been pointed out that the Gov­ern­ment wants the RBI

to part with most of its profit as div­i­dend. The cen­tral bank, how­ever, feels that it needs to re­tain a share of prof­its to make its bal­ance sheet stronger.

Ac­cord­ing to an­other of­fi­cial, the gov­ern­ment wants the RBI to have a new pol­icy in place for div­i­dends and cap­i­tal re­serves. “Cur­rently, the RBI’s cap­i­tal needs put its pro­vi­sion­ing at 27 per cent, while most cen­tral banks have theirs at 14 per cent. Our cal­cu­la­tions state that if RBI pro­vi­sions at 14 per cent, it can free up to Rs 3.6 lakh crore,” the of­fi­cial said.

The RBI board is likely to dis­cuss cap­i­tal frame­work and other is­sues at its meet­ing sched­uled to be held on No­vem­ber 19. Ear­lier this year, the RBI de­cided to pay Rs 50,000 crore as div­i­dend to gov­ern­ment in line with the Union Bud­get pro­vi­sions, help­ing the Cen­tre to stick to its fis­cal roadmap.

The Re­serve Bank, which fol­lows July-June fi­nan­cial year, has paid about 63 per cent higher div­i­dend than pre­vi­ous year (2016-17). The RBI made a div­i­dend pay­out of Rs 30,659 crore for the fis­cal ended June 2017.

As per the Bud­get Es­ti­mate, the gov­ern­ment pro­jected to col­lect Rs 54,817.25 crore as div­i­dend or sur­plus of Re­serve Bank, na­tion­alised banks and fi­nan­cial in­sti­tu­tions. The gov­ern­ment re­alised Rs 51,623.24 crore un­der this head in the pre­vi­ous fis­cal. It is to be noted that the RBI trans­ferred a sur­plus of Rs 30,659 crore as div­i­dend to the gov­ern­ment for the year ended June 30, 2017, which was less than half of what it paid in the pre­vi­ous year (Rs 65,876 crore).

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