Published 15:28 IST, August 27th 2019
RBI excess capital had earlier benefited Congress: Here's how
While Congress leaders like Surjewala and Rahul Gandhi have blasted the government for 'looting' the RBI,the UPA government too had gained from excess capital.
The Reserve Bank of India (RBI) on Monday approved a transfer amounting to Rs. 1.76 lakh crore, mainly comprising surplus capital, to the Centre. Presided over by Governor Shaktikanta Das, the central board of the RBI announced that the government would receive a surplus of Rs.1,23,414 crore in the form of a dividend for the year 2018-19 and Rs.52,637 crore by dipping into excess provisions. The decision was taken following the Bimal Jalan-led committee's recommendations, after it had been appointed to find a solution for what was to be done with the central bank's excess capital following Das's appointment as RBI Governor. However, just as it was towards the end of 2018 when the RBI and the government were reportedly at loggerheads over a range of issues, the matter has taken a political turn.
While the Congress party, including their communications in-charge Randeep Singh Surjewala and Member of Parliament from Wayanad Rahul Gandhi, castigated the government for trying to 'loot' the RBI and wreck the economy, their charge smacks of hypocrisy. This is owing to the fact that the Congress party-led United Progressive Alliance (UPA) government had itself taken an initiative in this regard, way back in 2014.
Formation of Y H Malegam committee
A technical committee of the RBI board headed by chartered accountant Y H Malegam was appointed to look into the issue of surplus transfer to the government in early 2014. The findings of the committee were that the contingency and asset development reserves were at an adequate level. It recommended that the RBI should transfer its entire surplus earned in the previous accounting year to the government for the next three years. According to the committee, a portion of the surplus could be held in reserve after three years, with the growth of the RBI balance sheet.
The excess capital 'gift' to the UPA government
In the same year, the RBI gave almost its entire surplus to the Congress party-led UPA government. Approved by the RBI board, this transfer of Rs.52,679 crore of surplus for 2013-14 was the highest ever given to the government in history till Monday's announcement. It was 60% more than what was transferred in 2013. The surplus of Rs.61,804 crore generated by the RBI in 2013 was 43.6% more than the previous year. Out of this massive sum, the government received Rs.33,010 crore as surplus.
Congress only alleging what it had benefited from earlier
The Manmohan Singh government, in the lead up to the 2014 elections, was confronted with economic woes on multiple fronts, with the exchange rate going out of control, the growth of the economy slowing, India coming to be viewed as one of the 'Fragile 5', and also, in reining in the fiscal deficit. Thus, at this point, this capital infusion from the RBI was of considerable help. A similar claim has been made by Congress leaders now.
Updated 18:06 IST, August 27th 2019