Contingency Risk Buffer to be maintained at 5.5 pc
MUMBAI: The Reserve Bank of India (RBI) board on Friday (August 14) approved transfer of Rs57,128 crore as surplus to the Central Government for the accounting year 2019-20, while deciding to maintain the Contingency Risk Buffer at 5.5 per cent, according to a statement issued by RBI.
It may be worth mentioning here that last year, the RBI board had transferred a surplus of Rs1.76 lakh crore to the government, the highest transfer ever to the Centre’s coffers, though as a culmination of a fierce debate and leading to major other developments within the RBI.
Though Rs60,000 crore has been budgeted from the RBI side, the government seems to have expected more, especially at a time when its finances are stretched beyond its limit and more funds may have to be pumped into the system, thanks to the COVID 19 and its continuing negative impact on the economy.
The recently released data showed the Centre’s fiscal deficit for the first three months of 2020-21 had stood at Rs6.62 trillion, which is estimated at 83 per cent of the budgeted target for the whole year.
The much larger RBI surplus a year before followed the recommendations of a committee chaired by the former RBI governor Bimal Jalan on capital transfer to the Government.
The RBI board at its meeting on Friday also reviewed the current economic situation, continued global and domestic challenges and the monetary, regulatory and other measures taken by RBI to mitigate the economic impact of COVID-19 pandemic.
The issue of transferring the RBI’s reserves to the government came to the fore as a hot topic last year triggering a debate on the justifiability of the level of funds the government can demand from the RBI.
The issue emerged as a major bone of contention between the previous RBI governor Urjit Patel and the government leading to the RBI setting up the Bimal Jalan committee to examine what level of reserves the apex bank should actually maintain, and how much it could transfer to the government.