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Over to New Delhi

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Photo: Mint

What we should really be waiting for is a shift in India’s fiscal stance. The budget was made before covid roared back. It’s for New Delhi now to get into rescue mode

Last week’s 99,000 crore-plus transfer by the Reserve Bank of India (RBI) of its surplus to the government, its owner, had piqued curiosity over how it had managed such a large payout in a pandemic-hit year. After all, an expanded balance sheet the previous year had forced RBI to replenish its contingency fund, leaving it with a low surplus. The release of its annual report on Thursday showed the math.

In contrast with asset growth of around 30% during the year ended 30 June 2020, RBI’s balance sheet grew only about 7%, to just over 57 trillion, in the nine months to 31 March 2021. This meant that RBI had to put just 20,710 crore into its safety vault to maintain its level at 5.5% of assets, as recommended by the Bimal Jalan panel in 2019. But a smaller buffer top-up isn’t enough to explain its dividend. The central bank’s earnings were quite robust in 2020-21. For this, it reportedly has gains on foreign exchange and other market operations to thank. Well done. Attention will now turn to its monetary policy review on Friday. But what we should really be waiting for is a shift in India’s fiscal stance. The budget was made before covid roared back. It’s for New Delhi now to get into rescue mode.

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