The Bimal Jalan Committee on Economic Capital Framework has suggested transfer of funds from the Reserve Bank of India to the government in tranches over 3-5 years.
The Committee will submit its report within 15 days to RBI Governor Shaktikanta Das. Based on the recommendations, the RBI will decide what share of its reserve will be transferred to the government.
According to sources, the report will reflect the differences of opinion among the Committee members. It is believed that Finance Secretary Subhash C Garg, who is a member of the panel, had some divergent views and these will be part of the report.
The Committee met for the last time on Wednesday, and according to sources, the report was given final touches. The surplus capital transfer would help the government meet its fiscal deficit target. The government has set a fiscal deficit target of 3.3 per cent of the gross domestic product (GDP) for the current fiscal, revised downward from 3.4 per cent pegged in the interim Budget in February. Besides surplus capital transfer, the government is expecting a ₹90,000-crore dividend from the RBI in the current financial year as against ₹68,000 crore received last fiscal.
Even as differences surfaced last year over the quantum of RBI’s reserve that can be transferred, government officials had said that the global norm is to maintain reserves of 14 per cent of total assets. The RBI’s reserves stand at 27 per cent. This issue figured in the communication between the government and the RBI last year, and although the government had said it was not asking for a part of the surplus reserve to be transferred to it, the general feeling was that the fixing of a norm was the precursor to a transfer.
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What earlier panels said
Earlier, the ideal size of RBI’s reserves was examined by three committees headed by V Subrahmanyam in 1997, Usha Thorat in 2004 and Y H Malegam in 2013. While the Subrahmanyam panel recommended building a 12 per cent contingency reserve, the Thorat panel suggested that it should be maintained at 18 per cent of the total assets.
The RBI board did not accept the recommendation of the Thorat committee and decided to continue with the recommendation of the Subrahmanyam panel. The Malegam panel said the RBI should transfer an adequate amount of its profit to the contingency reserves annually, but did not come up with a particular number.
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