Reserve Bank of India’s central board has decided to transfer a whopping Rs 1.76 lakh crore to the government including Rs 1.23 lakh crore surplus and the Rs 52637 core excess provisions. The amount is for 2018-19 year and the already transferred amount of Rs 28000 core comes under the transfer amount.
The new transfer amount is an unexpectedly large as the budget 2019 presented by the Finance Minister Ms Nirmala Sitharaman projects RBI transfer at around Rs 95000 crore for the current financial year. As per the budget, the total dividends and surplus from RBI, nationalised banks and financial institutions and PSEs, were projected at Rs 1.6 lakh crore in fiscal year 2019-20.

Read: RBI’s capital reserve- components and controversies.

Excess Provisions discovered by the Jalan Committee
Interestingly, the new transfer amount also includes the surplus discovered by the Jalan Committee. An amount of Rs 52637 crore will be transferred as surplus that is there with the RBI as excess provisions.
Over the last five years, the RBI is making provision to its various fund including the contingency fund through provisions. Excess provisions mean that the RBI has excess funds under these provisions.
The Bimal Jalan Committee on Economic Capital Framework made several suggestions for surplus transfer from the RBI to the government, but the final report is yet to be published.
Transfer will power the government to go for the stimulus
The strong RBI transfer that is nearly double the budgeted amount is a bonanza for the government. It may help the government in two ways.
First, in a slowdown period, the tax realisation may be lower than the expected estimate. At the same, time government has to raise expenditure to support the economy or simply, it has to give some sort of a stimulus. Here, the RBI transfer will be big hand.
Secondly, it may help the government to achieve the budgeted fiscal deficit of 3.3%.

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