Government didn't seek Rs 3.6 lakh cr surplus reserves from RBI, claims top FinMin official

A top official of the Finance Ministry on Friday claimed that there was no proposal from the government to ask the RBI to transfer its surplus reserves to meet its fiscal requirements.

Over the past few weeks, both government and the Central bank have been fighting over how much autonomy the RBI should have. (Image: PTI)

New Delhi: A top official of the Finance Ministry on Friday claimed that there was no proposal from the government to ask the Reserve Bank of India (RBI) to transfer its surplus reserves to meet its fiscal requirements. The economic affairs secretary Subhash Chandra Garg took to micro-blogging site Twitter on Friday to put a rest on speculation that the government was eager to withdraw Rs 3.6 lakh crore to meet its fiscal deficit. However, Garg admitted to the fact that a proposal was under discussion to fix the appropriate economic capital framework of the Central Bank. “Lot of misinformed speculation is going around in media. Government’s fiscal math is completely on track. There is no proposal to ask RBI to transfer Rs 3.6 or 1 lakh crore, as speculated,” Garg tweeted. Further sharing government’s fiscal deficit figures, Garg wrote: “Government’s FD in FY 2013-14 was 5.1%. From 2014-15 onwards, Government has succeeded in bringing it down substantially. We will end the FY 2018-19 with FD of 3.3%. Government has actually foregone 70000 crore of budgeted market borrowing this year.” The reports of finance ministry demanding for transfer of a large amount of surplus from RBI is believed to be the prime factor behind the ongoing discord between the government and the Central bank. Over the past few weeks, both government and the Central bank have been fighting over how much autonomy the RBI should have as the administration of Prime Minister Narendra Modi seeks to reduce curbs on lending and to gain access to the RBI’s surplus reserves. The rift escalated to a new level after RBI’s deputy governor last month stated that undermining central bank independence could be ‘potentially catastrophic’ for the country and its economy. In the backdrop of the same, it is being speculated that the incumbent RBI governor Urjit Patel might tender his resignation in bank’s next board meeting that is scheduled to take place on November 19. Earlier this month, former RBI Governor Raghuram Rajan had described the apex bank as a ‘seat belt’ for the Central government which is in the driver's seat, protecting the government against any "accident".