Question 2GS3GS3

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)

Main Body

RBI has transferred about 2910ODD as surplus to Govt of India for the FY 2024-25 as per the agreed principles. RBI's surplus = RBI's income - RBI's expenditure (bond, currency, salary, gold etc - contingency fund Implications of RBI's surplus transfers to the government as Positives (1) Helps govt. advance developmental initiatives (e.g.) Subsidies on food, fuel etc (2) Provides govt. fiscal space to react to urgencies and 'black swan' events (e.g) COVID-19

— ANANYA RANA · AIR 60

73 words1 paragraphs

Conclusion

(2a) Promotion of funds without borrowing thus maintaining intergenerational sustainability (4) Keeps fiscal deficit within limits thus stabilizing credit ratings and enhancing investment opportunities. (5) Pursue public trust in State and encourage people to remain & contribute to development (e.g) reduce brain drain as Negatives/Challenges (1) Reduces RBI's autonomy challenges [graphic shown] financial resources of RBI (2) May be treated as political gain tool by govt. (3) May act as moral hazard & may disrupt fiscal prudence RBI's surplus transfer to govt. must be guided by the principles set in by expert committee to adhere to principles of frugality

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Topper

ANANYA RANA

AIR 60

Subject & Paper

GS3GS3

Topic

Economic Development

Macroeconomic indicators

RBI surplus transfers

Writing Stats

172

Total words

Paragraphs

analytical

Tone

Linked PYQ

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50M2014प्रतिपादयत