The high-level Bimal Jalan panel could hold another meeting before submitting its report on the Reserve Bank of India’s economic framework that will dictate how much of its surplus could be transferred to the government and when. This follows a bureaucratic reshuffle late on Wednesday evening. “We could hold another meeting as a new economic affairs secretary has been appointed,” said a person familiar with the matter. The call will be taken in some time, the person told ET. ET had reported that the recommendations of the report weren’t unanimous with Subhash Chandra Garg having dissented. Garg was transferred to the power ministry from his post as economic affairs secretary on Wednesday. The panel favoured periodic transfers of the RBI’s surplus reserves to the government over three to five years, contrary to the government’s expectation of a lumpsum payment. Any additional fund transfers from the RBI will help the government bridge its fiscal deficit as also meet other obligations. The panel held its last meeting on July 17 to finalise the recommendations. The report is now being given the finishing touches, said the person cited above. The committee was to submit the final report in 15 days to the RBI.
The six-member panel was set up in December 2018 by the RBI to review its economic capital framework (ECF) following several exchanges between the central bank and the finance ministry on the issue. The government had invoked powers under rarely used Section 7 of the RBI Act in October 2018 seeking consultations with the central bank on 12 issues including the ECF. The government wanted a substantial transfer from RBI’s ?9.6 lakh crore reserves. Most of the RBI’s income accrues from interest earned on its foreign reserves invested overseas and that on rupee securities in India. The panel has also mooted a periodic review of the economic capital framework or ECF of the central bank to decide the appropriate level of reserves for the RBI.
The Economic Times, 26th July 2019
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