A misleading article on an unfortunate controversy: RBI's reserves
Reserve Bank of India’s ‘Excess’ Reserves:
This is a misleading article. I don't know the background of the writer. I'm sure, he has not seen the chapter on RBI's Accounts in the Annual Report during the current Century. Yes, I have worked in CAS, Nagpur and the concerned Division of DGBA.
RBI has no magic to create money without affecting RBI's Balance Sheet and/or GOI's borrowing. I am not interested in going into more details about the accounting entries mentioned in the article, as they are irrational, irrelevant and do not take into account the impact on "National Balance Sheet".
Those who are interested may please sit with the article and RBI Annual Report to understand more. May even suggest changes in RBI's accounting practices through an open letter to RBI or an article in the media. Always, there should be room for improvement.
Compared to GOI Budget papers or company accounts, RBI balance sheet and explanatory notes appended to that has been more simple and transparent since 2001.
M G Warrier