Confusion over where to use the R1.76 trillion money received from the RBI

Mumbai, Ta. August 27, 2019, Tuesday

The government has now begun to decide where to use the Rs 5.5 trillion money received from the Reserve Bank. The finance ministry has begun deliberations on whether to use this money to reduce borrower or provide relief to the economy.

At a board meeting on Monday, the Reserve Bank approved a proposal to pay a dividend of Rs 5.5 trillion and transfer another Rs 5.5 billion from its surplus to the government.

India's economic growth rate is currently at a five-year low, at the same time the Reserve Bank has received this lottery. Thousands of jobs in the auto sector have been lost due to the economic downturn and consumer spending has also fallen.

Finance Minister Nirmala Sitaram last week announced some concessions to boost the economy by increasing consumption in the country. Considering the huge amount of money received from the Reserve Bank, the finance ministry intends to cut borings this year.

If the government uses these funds to reduce the revenue deficit in the current fiscal year, the government will have to reduce borings, sources said, or the government may also consider the aspect of using the funds for new expenditure.

For the past few years, the finance ministry has been demanding higher payouts from the Reserve Bank. The government has argued that the Reserve Bank is holding more funds than it needs.

Due to the economic downturn, the revenues through taxes are projected to be lower than the budget estimates in the current fiscal year. The RBI has decided to transfer the money to the government based on the recommendations made by the Bimal Jalan Committee after studying how much RBI should be retained and how much should be transferred to the government from its own reserve.