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Letters to BS: Manmohan Singh's stand on RBI's fund transfer is unfortunate

The depletion of RBI's reserves accelerated since 2013 when Singh was the PM

Business Standard 

Former prime minister Manmohan Singh
Former prime minister Manmohan Singh

This refers to “Jalanomics: No rain, just a drizzle” (Banker’s Trust, September 2). The piece gives an insight into the task entrusted to the Jalan panel and the deft manner in which the former Reserve Bank of India (RBI) governor and his team (minus S C Garg) put together a report covering most of the aspects about the central bank’s capital framework which were being seen even by the experts with the bewilderment of the “five blind men” who described the elephant.

The Jalan Panel report, which has put a lid on the glaring ad-hocism seen in the earlier estimates and reports on RBI’s reserves (1997, 2004 and 2013) can form the solid basis from which future discussions on the maintenance of capital and reserves by RBI can begin. There can be several ifs and buts, though.

It is unfortunate that a person of former PM Dr Manmohan Singh’s stature expresses concern over the financial strength of the RBI in the context of the Rs 1.76 trillion surplus transfers to the Centre. The depletion of RBI’s reserves accelerated since 2013 when Singh was the PM. The appropriation from surplus income to contingency fund was discontinued based on a strange observation by Malegam Committee that the RBI had “adequate reserves for three years”.

M G Warrier, Mumbai

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First Published: Mon, September 02 2019. 22:16 IST