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.
Main Body
Reserve Bank of India has multiple sources of income like interests on loans, investments, fines etc. Often these leads to huge pool surpluses with RBI. RBI Surplus: - Token money (no-M) (multiple of indirect, using for etc.) - RBI transfer to government giving fiscal space to government Implications of RBI's surplus transfer: POSITIVE: (1) It gives government a source of internal money to reduce its fiscal deficit.
2Reduce the requirement to borrow at higher rates / giving sustainability of finances. (3) It gives government's role over the independent working of RBI. NEGATIVE: (1) It increases the possibility of inflation by injecting the money without any conditions (2) It is against the policy of free and fair working of market (laissez faire) (3) It gives government's role over the independent working of RBI. (4) Reduces the trust by the public. Further has for the economic working.
— Vaibhavi Agrawal · AIR 35
146 words1 paragraphs
Conclusion
RBI is an important institution to maintain the financial stability of the country, we need to ensure careful transfer after deliberation.
21 words
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Topper
Vaibhavi Agrawal
AIR 35
Subject & Paper
GS3GS3
Topic
Economic Development
Mobilisation of Resources
Government Resources - RBI surplus transfers and fiscal implications
Writing Stats
167
Total words
1
Paragraphs
formal and analytical
Tone