The Reserve Bank of India's surplus transfers offer the government much-needed fiscal space, yet they are not without challenges. Critically examine the implications of the RBI's surplus transfers to the government. (Answer in 150 words)

RBI transfers its surplus transfers and funds to government of India, ensuring fiscal development and reduction of government debt. Benefits/Positive: - Provide for social welfare policies to RIMARU classes Utility Scheme co-operation: - Reduce loss to PSUs Challenges faced: (1) Issue of contention - with government and RBI at loggerhead over principles of transfers (2) Reduce RBI profit - who has followed fiscal discipline to achieve this (3) Overdependence of government on RBI transfers, reducing motivation for promoting own funds (4) Dilution of Autonomy - of RBI, who is unable to decide an idlocation of profit Implications: → Promote social welfare policies e for subsidies → Reduce debt from international markets → Help in fiscal health → help achieve targets of budget Yet, need is for better co-operation between: - forming standards and principles e - Suggestion of ujal Patel committee - Analyse liabilities and expenses of RBI before transfer - External audit of transfer, every 6 months Thus, need is to maintain fiscal discipline and not disinvest those who promote profit generation.

— RAKHI · AIR 65