Government "Usurps Huge Windfall From RBI": Jairam Ramesh Hits Out

The central government now "usurps a huge windfall" from the Reserve Bank of India, Congress leader Jairam Ramesh said after the central bank approved a record payout of Rs. 1.76 lakh crore to the government from its surplus and reserves.

"Urjit Patel and Viral Acharya held the fort. They were forced to leave. The fort was breached. The Govt of India now usurps a huge windfall from the RBI going contrary to what the central bank's own think tank CAFRAL had said. Fiscal breathing space but at what and whose cost?" Mr Ramesh tweeted.

His tweet comes a day after an expert committee chaired by former Governor Bimal Jalan made its recommendations to the central bank.

Congress MP Rahul Gandhi said the move was the same as "stealing from the RBI".

"PM and FM are clueless about how to solve their self created economic disaster. Stealing from RBI won't work - it's like stealing a Band-Aid from the dispensary & sticking it on a gunshot wound," Mr Gandhi tweeted.

The record payout by the RBI comes at a time when there are signs of severe stress in several sectors, from housing to manufacturing. The total payout of Rs. 1.76 lakh crore includes Rs. 1.23 lakh crore as dividend and Rs. 52,640 crore surplus capital, the RBI said in a statement. The dividend payment includes Rs. 28,000 crore already transferred to the government in February, before the national election.

The RBI payout is much larger than government estimates. In its Budget for the financial year 2019-20, the government has estimated a dividend payment of Rs 90,000 crore from the RBI.

"Rs. 1.76 lakh cr given to the govt by RBI is almost the exact same amount missing from Budget 2019 announcement. Where was that money spent? Why was it missing from the Budget? Looting the RBI like this only devastates our economy further & reduces credit rating of the bank," the Congress party said in a tweet earlier today.

The RBI's move comes days after the government announced a range of measures, including an immediate injection of Rs. 70,000 crore into state-run banks, instead of spreading it over the year ending March 2020 as announced in Budget, to push growth in the sector.

Economists say the RBI payout will likely help the government meet its tax revenue shortfall and fund higher spending.