TOPIC OF THE DAY :- A) Interim bailout: RBI
surplus to govt
A system for sharing the RBI’s surpluses with the Center must be
quickly institutionalized
The decision of the central board of the Reserve Bank of India to transfer
an interim surplus of ₹28,000 crore to the Centre should come as a big
relief to the Modi government. Together with the ₹40,000-crore final surplus
share for 2017-18, which the Centre received in the first half, the total
receipts from the RBI this fiscal will be a tidy ₹68,000 crore. For a
government strapped for finances and struggling to meet the revised
fiscal deficit target of 3.4% of GDP, the RBI’s largess will be handy. The
total surplus received by the Centre for 2018-19 is substantially higher
than the ₹50,000 crore it got from the RBI in 2017-18, and this is the
second successive year the central bank is making an interim transfer: last
year it transferred ₹10,000 crore. Though there is nothing wrong in a
shareholder demanding an interim dividend payout, the fact is that the
Centre is advancing a receipt from the next fiscal to bail itself out in the
current one. Should the RBI decide not to repeat this practice, the
government’s revenues will suffer because as much as ₹82,911 crore has
been budgeted on this count for the next fiscal. Again, the central bank is
not like a corporateenterprise, nor can the government compare itself
with a company shareholder. The RBI’s income andsurplus growth cannot
be measured in commercial terms since a large part of it comes
from statutoryfunctions it has to perform as a regulator.
The large payout this fiscal is bound to raise eyebrows, especially because
of the recent history of conflictbetween the RBI and the Centre over the
sharing of the former’s accumulated reserves as dividend with the
Centre. Pressure on this count was said to be a major reason for the
resignation of Urjit Patel as RBI Governor. Though the practice of an
interim payout started under Mr. Patel, there are inevitable questions
over whether there was pressure from the Centre now for the transfer of a
higher sum than last year. This is because the Centre had in the Interim
Budget bumped up receipts under this head from the central bank,
nationalised banks and other financial institutions to ₹74,140 crore from the
original estimate of ₹54,817 crore made in the 2018-19 Budget. Clearly,
the Finance Ministry knew what it wanted. There will, hopefully, be a
system and a structure in place once the committee under former RBI
Governor Bimal Jalan, that is now reviewing the economic capital
framework for the RBI, submits its report. It was constituted to de-
personalise and institutionalise a system for the sharing of the RBI’s
surpluses with the government, and is expected to come out with its
recommendations by the end of the next month.
MEANING
1) interim
Meaning : the intervening time(n).
Synonyms : provisional
Antonyms : finished
Example : “in the interim I’ll just keep my fingers crossed”
2) tidy
Meaning : arranged neatly and in order(adj).
Synonyms : orderly
Antonyms : unkempt
Example : “his scrupulously tidy apartment”
3) strapped
Meaning : short of money.
Synonyms : impoverished
Antonyms : rich
Example : “I’m constantly strapped for cash“
4) substantially
Meaning : to a great or significant extent.
Synonyms : essentially
Antonyms : slightly
Example : “profits grew substantially”
5) enterprise
Meaning : a project or undertaking, especially a bold or complex one(n).
Synonyms : activity
Antonyms : idleness
Example : “a joint enterprise between French and Japanese companies”
6) surplus
Meaning : an amount of something left over when requirements have been
met; an excess of production or supply(n).
Synonyms : excess
Antonyms : essential
Example : “exports of food surpluses”
7) statutory
Meaning : required, permitted, or enacted by statute(adj). Synonyms : legal
Antonyms : illegal
Example : “statutory controls over prices”
8) conflict
Meaning : be incompatible or at variance; clash(v).
Synonyms : battle
Antonyms : peace
Example : “parents’ and children’s interests sometimes conflict”
9) accumulated
Meaning : gather together or acquire an increasing number or quantity
of(v).
Synonyms : acquire
Antonyms : contract
Example : “investigators have yet to accumulate enough evidence”
10) inevitable
Meaning : certain to happen; unavoidable(adj).
Synonyms : imminent
Antonyms : avoidable
Example : “war was inevitable”
11) bumped
Meaning : move or travel with much jolting(v).
Synonyms : bounce
Antonyms : placate
Example : “the car bumped along the rutted track”
12) estimate
Meaning : roughly calculate or judge the value, number, quantity, or extent
of(v).
Synonyms : appraisal
Antonyms : ignorance
Example : “the aim is to estimate the effects of macroeconomic policy on
the economy”
