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RBI transfers its surplus to the govt, but the deficit is just too wide

The amount may not be very significant in terms of supporting the govt finances as it would be around 0.25% of GDP against an expected fiscal deficit of close to 8% for 2020-21

Madan Sabnavis, chief economist, CARE Ratings (Photo: PHOTO CREDIT: Kamlesh Pednekar)
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Madan Sabnavis, chief economist, CARE Ratings (Photo: PHOTO CREDIT: Kamlesh Pednekar)

Madan Sabnavis
The transfers from RBI to the government is always keenly watched. This year the RBI Board has approved a transfer of Rs 57,128 crore to the government as against Rs 1.48 trillion in 2018-19 and Rs 40,000 cr in 2017-18. Last year it was higher due to the additional formula driven transfer of reserves to the central government. It was a one time transfer and hence the benefits are not recurring to the same extent.

The amount may not be very significant in terms of supporting the government finances as it would be around 0.25% of GDP against an expected fiscal

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