DEA gets a makeover
com/article/economy-policy/ subhash-chandra-garg-the-man- who-started-many-fires-for- finance-ministry-119072401795_ 1.html
Hope this link opens. Found this report interesting.
A slightly edited version of the letter copied below was published in Business Standard during 1st week of July 2019.
Hope Modi 2.0 continues Swacchatha Abhiyan
M G Wa rrier
July 2, 2019
This refers to the report “Jalan Panel seeks to convince Garg to tone down dissent note” (Business Standard, July 2). The message that one member in the Jalan Panel is more equal than even the chairman of the Panel going into the Economic Capital Framework (ECF) of RBI is disturbing. Viewed from another angle, the report brings out the undercurrents that have been trying to destabilize RBI’s top management since the departure of Dr Raghuram Rajan. In the instant case, the effort by the finance ministry representative on the Jalan Panel to prevent application of mind by the other members who are professionals is glaring.
A word about the dispute over the revaluation reserves which the finance secretary wants to monetize and transfer to GOI. Such action will be, in simple terms, similar to devaluation of rupee. The accounting entries will result in depletion of the value of RBI’s gold and forex holdings by the amount in dollar terms to the extent of the ‘notional surplus’ created and transferred to GOI.
In the context of RBI’s growing balance sheet size, the present level of the central bank’s share capital and reserves is not huge. RBI has been using its funds for investment in shares of apex financial institutions and transferring divestment proceeds of such investments to GOI most of the time. By a conscious decision, RBI’s share capital remains static at Rs5 crore since inception (1935). Time is opportune to amend the provisions of RBI Act to provide for raising the share capital of RBI to a decent level, say the equivalent of US $200 billion and to create specific enabling provisions to augment reserves out of surplus income, to a higher level than the present 7 percent of assets..
M G Warrier, Mumbai