Protect the RBI's balance sheet

In the concluding part of the series, the author says the continued pressure on the RBI might have been successfully resisted but it has taken a toll on the reputation of the institution built up pai

The most disturbing developments in recent years have been formal suggestions emanating from the government’s official statutory Economic Survey proposing a raid on the RBI’s balance sheet, with the purpose of funding the recapitalisation of public sector banks. The proposal was to transfer a portion of the stock of securities held in the RBIs balance sheet to public sector banks. It was argued that the RBI has excess capital in its balance sheet.
 
As it happens, the composition of central banks’ balance sheets remains an arcane subject for discussion. Regardless of conclusions on how such balance sheets should be