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The Reserve Bank of India must not give in to pressure from the Finance Ministry to part with its surplus reserves, said economist Omkar Goswami. The Centre wants ₹3.6 lakh crore from the RBI reserves of ₹10.6 lakh crore. From 2013-14, the RBI has been transferring its entire surplus in the income-expenditure account to the Centre. In 2017-18, this was ₹50,000 crore.
Not satisfied, the Centre now wants ₹3.6 lakh crore from the RBI’s reserves because it badly needs money to meet its fiscal deficit targets, ‘which have gone for a toss,’ Goswami said adding, if need be, the RBI Governor and the Deputy Governors should resign rather than give in to the pressure. He was delivering the inaugural MV Arunachalam Memorial Lecture on ‘India in the Next Decade: A story of Bright Sunlight and Dark Shadows’, organised by the Southern India Chamber of Commerce and Industry. Arunachalam, the former CEO of the Chennai-based Murugappa Group, died in 1996.
Goswami also said the Centre wants the RBI to relax its stressed asset recognition norms.
The Centre also wants the RBI to relax it’s Prompt Corrective Action norms on weak banks without adequate CRAR — Capital to Risk (weighted) Assets Ratio — that came in to being from April. These are very badly performing banks, and cannot be left to do business as usual. These banks are cribbing to the Centre, which wants greater relaxation, claiming reference to Basel III standards, said Goswami, who is the Chairman of CERG Advisory Pvt Ltd. Goswami listed out four critical social issues that need attention. These are female foeticide and infanticide; failure of education; rising inequality and a large part of India being left behind. None can take away the success of economic growth but it would be foolhardy to wish these ‘four fractures’ away, he said, adding if not attended to these will lead to social upheaval in the long run.
To a query from the audience, Goswami said the Centre should not interfere with well established institutions like the central bank. Demonetisation was a ‘total failure and has not achieved any purpose,” he said.
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