The transfer of reserves is the least RBI can do to combat the slowdown its high rates aggravated
The decision of the central board of the Reserve Bank of India (RBI) to transfer ₹1.76 trillion of excess reserves this fiscal year to the government is the right one, even though we will see critics tut-tutting all the way. The decision can be analysed from three perspectives: one, RBI under governor Shaktikanta Das has succumbed to government pressure, and thus compromised its independence. Two, one can fret about whether this bonanza will be blown up on populist freebies. The third way is to look at it as RBI’s way of compensating the economy for its own missteps over the last three years.