RBI surplus may not help government much

The possibility of the government getting a fiscal boost from the RBI surplus is pretty slim. The high-level Bimal Jalan panel (which is looking at the economic capital framework) is yet to give its report. It is expected to link such a distribution to meaningful utilisation of funds. This could imply retirement of government debt or recapitalisation of banks. Moreover, the ‘windfall’ could be relatively small and also stretched over a protracted period of time.

The RBI has more than Rs 9.6 lakh crore surplus capital with it. The panel has been entrusted with the responsibility of reviewing the best practices followed by central banks across the world in making assessments and provisions for risks. In the past, the funds have been a bone of contention between the government and the central bank.