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The impact of RBI’s transfer of Rs 1.76 lakh crore from surplus reserve to government, according to experts

Updated : August 29, 2019 11:52 PM IST

The Reserve Bank of India (RBI) on August 26 approved the transfer of record Rs 1.76 lakh crore dividend and surplus reserves to the government, boosting Prime Minister Narendra Modi-led regime's prospect to stimulate the slowing economy without widening the fiscal deficit.

Governor Shaktikanta Das-led RBI central board gave its nod for transferring to the government a sum of Rs 1,76,051 crore comprising Rs 1,23,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF), the apex bank said in a statement.

The excess reserve transfer is in line with the recommendation of former RBI governor Bimal Jalan-led panel constituted to decide the size of capital reserves that the central bank should hold. The government was represented by Finance Secretary Rajiv Kumar in the panel which finalised its report on August 14 by consensus.

In an interview to CNBC-TV18, Sudipto Mundle, former chairman of National Statistical Commission; HR Khan, former deputy governor of RBI; A Prasanna, chief economist at ICICI Securities; Ananth Narayan, professor at SPJIMR discussed the implications of the accounting change by RBI and the huge dividend which could become a drug for a government that is always running short of money.

(With inputs from PTI)
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