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Ex-RBI dep. governor Rakesh Mohan, who was a part of Bimal Jalan committee, criticises RBI's move to transfer higher ‘excess’ surplus to government this year by compromising on risk provisions. Pegs next yr surplus transfer to reduce by Rs 20,000 cr. Read:
business-standard.com/article/econom…
business-standard.com/article/econom…
Mohan further says that the NDA government's estimates of RBI's ‘excess’ reserves to the tune of Rs 3 trillion (Rs 3 lakh cr) was based on an “erroneous approach.” Last year, former finance secy Subhash Chandra Garg had written to RBI saying it had Rs 3 trillion excess reserves.
Mohan says if the revaluation reserves were to be utilised (which forms 70% of RBI's reserves), the central bank would also have to sell foreign exchange reserves at the same time.
Mohan justifies giving a range for suggesting risk provisions. “It would have been a mistake to give one rigid number. If you look at the objectives of inflation targeting by the monetary policy committee, it is 4 per cent plus minus 2 per cent.”
