Economic Survey 2016-17 : Analysis by Dr Charan Singh

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Excellent analysis. Forthright presentation. Dr Charan Singh's inside RBI experience and close association with debt management have helped this assessment. CEA had smuggled the idea of drawing from RBI reserves in ES 2016. The fallacies and inaccuracies in the arguments were pointed out by many, prompting Dr Raghuram Rajan to offer 'to teach the basics of RBI balance sheet to authors of ES 2016'. This year, taking advantage of Dr Rajan's absence at Mint Road and using demonetization as a cover ES 2017 has revived the proposal. Dr Urjit Patel and Dr Viral Acharya are intelligent enough to defend RBI's interest which is not different from national interest. It may be recalled that RBI had decades ago accepted atarget of "12 per cent of balance sheet total" for capital and reserves. It touched the target in 2009, but due to various reasons, reserves eroded to 8.4 per cent last year. Prudent accounting practices would compel the central bank to retain any wlndfall gains till a rational assessment of reserves needs are made of the accepted level of 12 per cent is achieved.

M G Warrier

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