RBI's decision to transfer Rs 1.76 lakh crore to govt will harm economy in long run: Economist Abhirup Sarkar

Accusing the Centre of snatching the Reserve Bank of India's (RBI) autonomy, economist Abhirup Sarkar on Tuesday said that the central bank's decision to transfer Rs 1.76 lakh crore to the government would harm the economy in the long run.

"The basic objective of any government in power is to do something within five years but institutions like RBI are there because they have a long-run view. If you take away their autonomy, then you will lose on the long run front and that is something very dangerous for the economy," he told reporters here.

Sarkar also said that the move would hamper the top bank's capacity to deal with any fluctuations in the value of the Rupee.

"RBI needs all this money for stabilising both the external and internal sectors. Sometimes there are fluctuations in the value of rupee and the RBI needs a huge fund and to stabilise them. If there is a lack of liquidity, the RBI needs a lot of funds to establish that," he said.

"Now that the fund has been transferred to the government, the RBI will not have that option and that is really bad of the economy," he added.

On Monday, the Central Board of the RBI approved the transfer of Rs 1,76,051 crore to the government on the recommendation of a committee led by its former chief Bimal Jalal.

The amount includes Rs 1,23,414 crore of surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF).