Govt asks for review of RBI's Economic Capital Framework

The government has not sought funds from surplus reserves of the Reserve Bank to meet the fiscal deficit, Minister of State for Finance Pon Radhakrishnan said Tuesday.

The minister in a written reply to the Rajya Sabha said, "No, sir. The government has not asked funds from its surplus reserves to meet fiscal deficit."

He was replying to a query if the government approached the RBI for extra funds from surplus reserves to meet the fiscal deficit target.

The RBI has massive Rs 9.59 lakh crore reserves, and the finance ministry and independent director S Gurumurthy want it to be lowered in line with global practices..

The RBI's central board on November 19 decided to constitute an expert committee to examine the Economic Capital Framework of the RBI.

The terms of reference and composition of the expert committee are to be jointly determined by the government and the central banker.

"Government has asked for a review of RBI's Economic Capital Framework," the minister said in the house.

The RBI transferred Rs 50,000 crore as surplus amount to the government in 2017-18.

An amount of Rs 30,659 crore was transferred in 2016-17 (the year of implementation of demonetisation) while Rs 65,876 crore was transferred in 2015-16.

RBI follows July-June financial year.