State of Indian Economy: Final Diagnosis

Hindu Business Line, September 8, 2012


Letters

Final diagnosis

This refers to the article “An MRI on health of the economy” (Business Line, September 7). The manner in which the precarious position of the economy has been explained goes well with the transparency in policy announcement that the RBI has exhibited in recent years. If the powers that be refuse to listen and make drastic changes in fiscal policy to reduce the obesity of the RBI’s balance-sheet, it could lead to the death of the central bank, and there should be no excuse that the diagnosis was delayed.

The concern about dwindling reserves (as percentage of asset size) deserves immediate attention. That the transfer of surplus profit to the Government at Rs 16,010 crore, as percentage of gross income, was lower by 10.4 per cent as compared with 2010-11 is no reason for comfort.

M.G. Warrier

Mumbai

(This article was published on September 7, 2012)



Business Line, September 7, 2012: An MRI on the health of the economy: S S Tarapore



Online comments:





Comments:

The simple language in which the precarious position of the economy which is the result of a lifestyle accepted by it post-LPG(Liberalisation-Privatisation-Globalisation) has been explained goes well with the transparency in policy announcement and accounting being exhibited by RBI in recent years. If powers that be refuse to listen and make drastic changes in fiscal policy to reduce the obesity of the RBI’s balance sheet, the saddest thing mentioned in the article, namely the death of the central bank, may happen and then, there should be no excuse that the diagnosis was delayed.

To ensure that temptations of government emanating from external compulsions do not dilute the strength of RBI’s balance sheet, GOI should take measures to augment the share capital of RBI after carrying out appropriate amendments to RBI Act. Till such time RBI should be allowed to retain surplus income by transfer to reserves.

M G Warrier, Mumbai

from: M G WARRIER

Posted on: Sep 7, 2012 at 17:57 IST



Indian Express, August 30, 2012: RBI doubles contingency reserves, transfer of surplus to Centre falls





Reader's Comments(2)
Post a comment

RBI's reserves

Reply
Forward

M G WARRIER
02-Sep-2012



Transfer of surplus profit to GOI was Rs 16010 crore which as percentage to gross income is lower by around 10.4 per cent as compared to 2010-11. Obviously, The transfer of %u2018surplus income%u2019 to government in a routine manner when the reserves position of the central bank shows a declining trend needs a review. GOI should support the central bank%u2019s efforts to augment its reserves at least on par with the 12 per cent norm of capital adequacy RBI expects from banks it supervises. Despite a transfer of `2348 crore in 2011-12, from income to ADR raising its level to `18214 crore as on June 30, 2012, the CR and the ADR together constituted only 9.7 per cent of the total assets of the Reserve Bank as on June 30, 2012 showing a fall of 0.6 per cent from the level of 10.3 per cent during the previous year, taking the original target of 12 per cent further away. It may be recalled that in 2009 the target was almost in sight when the level reached 11.9 per cent.

RBI doubles contingency reserve, surplus transfer to Centre falls

Reply
Forward

Rekha Jagannath
29-Aug-2012







Comments

Popular posts from this blog

NAVAGRAHA STOTRAM

THE SUNSET OF THE CENTURY

The King of Ragas: Sankarabharanam