Interim bailout: RBI surplus to govt

 

 

Interim bailout: RBI surplus to govt

A system for sharing the RBI’s surpluses with the Centre must be quickly institutionalised
The decision of the central board of the Reserve Bank of India to transfer an interim surplus(बचत/अधिशेष) of ₹28,000 crore to the Centre should come as a big relief(राहत/सहायता) to the Modi government. Together(साथ में) with the ₹40,000-crore final surplus share for 2017-18, which the Centre received(प्राप्त किया) in the first half, the total receipts(प्राप्तियां) from the RBI this fiscal(वित्तीय) will be a tidy(साफ) ₹68,000 crore. For a government strapped for finances and struggling(संघर्ष करना) to meet the revised fiscal deficit(घाटा/अभाव) target of 3.4% of GDP, the RBI’s largesse(बख्शीश/दानशीलता) will be handy. The total surplus received by the Centre for 2018-19 is substantially(काफी हद तक/वास्तव में ) higher than the ₹50,000 crore it got from the RBI in 2017-18, and this is the second successive)(लगातार ) year the central bank is making an interim transfer: last year it transferred ₹10,000 crore. Though there is nothing wrong in a shareholder demanding(मांग) an interim dividend(लाभांश ) payout(भुगतान), the fact(तथ्य/वास्तविकता) is that the Centre is advancing a receipt from the next fiscal to bail itself out in the current one. Should the RBI decide not to repeat this practice(अभ्यास), the government’s revenues(आय/राजस्व) will suffer because as much as ₹82,911 crore has been budgeted on this count for the next fiscal. Again, the central bank is not like a corporate enterprise, nor can the government compare itself with a company shareholder. The RBI’s income and surplus growth cannot be measured in commercial terms since a large part of it comes from statutory(वैधानिक/क़ानूनी) functions(कार्यों) it has to perform as a regulator.

 

The large payout this fiscal is bound(बाध्य करना/सीमित करना) to raise eyebrows, especially because of the recent history of conflict(संघर्ष) between the RBI and the Centre over the sharing(साझाकरण ) of the former’s accumulated(जमा हुआ/संचित)reserves(आरक्षित) as dividend with the Centre. Pressure(दबाव) on this count was said to be a major(मुख्य ) reason(कारण) for the resignation(इस्तीफा) of Urjit Patel as RBI Governor. Though the practice of an interim payout(अंतरिम भुगतान) started under Mr. Patel, there are inevitable(अनिवार्य/अटल) questions over whether there was pressure from the Centre now for the transfer of a higher sum(तुलना ) than last year. This is because the Centre had in the Interim Budget bumped(टकराना) up receipts under this head from the central bank, nationalised(राष्ट्रीयकृत ) banks and other financial institutions to ₹74,140 crore from the original estimate(मूल लागत) of ₹54,817 crore made in the 2018-19 Budget. Clearly, the Finance Ministry knew what it wanted. There will, hopefully, be a system and a structure(संरचना) in place once the committee under former RBI Governor Bimal Jalan, that is now reviewing the economic(आर्थिक समीक्षा) capital(पूंजी ) framework(ढांचा/बनावट) for the RBI, submits its report. It was constituted(गठन ) to de-personalise and institutionalise a system for the sharing of the RBI’s surpluses with the government, and is expected(उम्मीद ) to come out with its recommendations(सिफारिशें/प्रशंसा) by the end of the next month.

 

Important Vocabulary

1. surplus(बचत/अधिशेष)
Synonyms: conformity, consent, acquiescence, amenability, assent
Antonyms: difference, disagreement, refusal, disobedience, rebellion

2. largesse(बख्शीश/दानशीलता)
Synonyms: donation, endowment, fund, philanthropy, alms
Antonyms: hindrance, hurt, injury, malevolence, stealing

3. dividend(लाभांश )
Synonyms: allowance, bonus, coupon, gain, premium
Antonyms: loss

4. revenues(आय/राजस्व)
Synonyms: credit, dividend, earnings, fund, gain
Antonyms: debt, loss, payment

5. substantially(काफी हद तक/वास्तव में )
Synonyms: considerably, essentially, extensively, heavily, largely
Antonyms: slightly, insignificantly

6. deficit(घाटा/अभाव
Synonyms: loss, shortfall, arrears, defalcation, default
Antonyms: abundance, adequacy, advantage, enough, perfection

7. statutory(वैधानिक/क़ानूनी)
Synonyms: lawfulm, legal, judicial, rightful
Antonyms: illegal, illegitimate, illicit, unlawful

8. bound(बाध्य करना/सीमित करना)
Synonyms: constrained, enslaved, obligated, restrained, apprenticed
Antonyms: irresolute, allowed, free, permitted, unbounded

9. sum(तुलना )
Synonyms: amount, bulk, quantity, value, worth
Antonyms: abstract, concept, fraction, individual, one

10. recommendations(सिफारिशें/प्रशंसा)
Synonyms: charge, endorsement, guidance, instruction, judgment
Antonyms: disapproval, opposition, refusal, rejection, blame

11. inevitable(अनिवार्य/अटल
Synonyms: imminent, impending, inescapable, inexorable, irresistible
Antonyms: avoidable, distant, escapable, later, doubtful

 

 

 

Credit To The Hindu News Paper

A system for sharing the RBI’s surpluses with the Centre must be quickly institutionalised
The decision of the central board of the Reserve Bank of India to transfer an interim surplus of ₹28,000 crore to the Centre should come as a big relief to the Modi government. Together with the ₹40,000-crore final surplus share for 2017-18, which the Centre received in the first half, the total receipts from the RBI this fiscal will be a tidy ₹68,000 crore. For a government strapped for finances and struggling to meet the revised fiscal deficit target of 3.4% of GDP, the RBI’s largesse will be handy. The total surplus received by the Centre for 2018-19 is substantially higher than the ₹50,000 crore it got from the RBI in 2017-18, and this is the second successive year the central bank is making an interim transfer: last year it transferred ₹10,000 crore. Though there is nothing wrong in a shareholder demanding an interim dividend payout, the fact is that the Centre is advancing a receipt from the next fiscal to bail itself out in the current one. Should the RBI decide not to repeat this practice, the government’s revenues will suffer because as much as ₹82,911 crore has been budgeted on this count for the next fiscal. Again, the central bank is not like a corporate enterprise, nor can the government compare itself with a company shareholder. The RBI’s income and surplus growth cannot be measured in commercial terms since a large part of it comes from statutory functions it has to perform as a regulator.

The large payout this fiscal is bound to raise eyebrows, especially because of the recent history of conflict between the RBI and the Centre over the sharing of the former’s accumulated reserves as dividend with the Centre. Pressure on this count was said to be a major reason for the resignation of Urjit Patel as RBI Governor. Though the practice of an interim payout started under Mr. Patel, there are inevitable questions over whether there was pressure from the Centre now for the transfer of a higher sum than last year. This is because the Centre had in the Interim Budget bumped up receipts under this head from the central bank, nationalised banks and other financial institutions to ₹74,140 crore from the original estimate of ₹54,817 crore made in the 2018-19 Budget. Clearly, the Finance Ministry knew what it wanted. There will, hopefully, be a system and a structure in place once the committee under former RBI Governor Bimal Jalan, that is now reviewing the economic capital framework for the RBI, submits its report. It was constituted to de-personalise and institutionalise a system for the sharing of the RBI’s surpluses with the government, and is expected to come out with its recommendations by the end of the next month.

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