Govt wants ‘appropriate’ capital policy for RBI
ASSERTING that its fiscal math is on track, the government on Friday denied reports that it had sought capital transfer of `3.6 lakh crore from the Reserve Bank of India. It, though, conceded that it was in talks with RBI to fix the size of the capital reserves the central bank can keep.
“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 `3.6 or `1 lakh crore, as speculated,” Economic Affairs Secretary S C Garg tweeted.
He added that the only proposal under discussion was on fixing an “appropriate economic capital framework” for RBI.
The tweet came in the backdrop of growing dissent between the RBI and the government over Prompt Corrective Action, RBI’s autonomy, and the central bank’s reluctance to share surplus funds with the government.
While the RBI is holding on its reserves, the finance ministry wants it to be generous with the dividend it shares with the government.
The issue was already highlighted by former chief economic adviser Arvind Subramanian , who in the Economic Survey for 2016-17 had said that the RBI was highly capitalised and nearly `4 lakh crore of its capital transfer to the government could be used for recapitalising the banks.
There were also many rounds of talks between the finance ministry and RBI. However, no agreement was reached.