The fight of ‘RBI vs Government’ has turned its nature from direct to virtual. The money which RBI was trying to save as surplus and Govt was trying to use in its policies is still not decided where to use it.
Central Finance Minister and Senior BJP leader Arun Jaitley said that the Govt is planning to make a policy to decide how much money the RBI should save in its reservoir and how much money should Govt use in its policies?
according to a new report by India Today, Jaitely said, “There has to be a capital framework. You (RBI) are keeping reserves for a rainy day while generations of people are waiting for rain. Surplus RBI reserves can be used for poverty alleviation.”
Jaitley called the decision of RBI to save money as a surplus “Totally illogical”.
In November, the BJP Govt proposed an ordinance which will make rules on how Govt can steer the RBI well.
The battle of using the money is going on for a few weeks. The Govt was planning to seek 3.6 lakh crore rupees from RBI which Jaitely, later, said is a fake news. He said the Govt does not require any kind of extra help from Reserve Bank of India or any other institution to meet its fiscal deficit target.
Last month, the Centre reportedly proposed a change in rules that will enable it to better supervise the central bank. This came in the wake of speculation about a rift between the finance ministry and the RBI. Early last month, a few news reports said the Centre has sought Rs 3.6 lakh crore capital from the central bank. However, government officials clarified there was no such proposal. Jaitley had also reiterated that the central government does not require extra funds from the RBI or any other institution to help meet its fiscal deficit target.
Jaitley also said that Raghuram Rajan was backing the Govt’s decision of a capital framework when he was the chief economic advisor for Govt, but Rajan changed his mind, somehow, when he became the Governor of Reserve Bank of India.