‘India cannot aspire to build strong, resilient economy with weakened central bank’: Harpal Singh Cheema
Referring to reports that the RBI has transferred nearly Rs 2.87 lakh crore out of the bank’s total income of around Rs 4 lakh crore, Cheema stated that this was among the highest dividend transfers ever made by the RBI.
Punjab Finance Minister Harpal Singh Cheema. (File Photo) Punjab Finance Minister Harpal Singh Cheema raised concerns over the Centre taking a dividend of nearly Rs 2.87 lakh crore from the Reserve Bank of India, warning that excessive extraction of the central bank’s reserves could weaken the country’s long-term economic resilience.
Referring to reports that the RBI has transferred nearly Rs 2.87 lakh crore out of the bank’s total income of around Rs 4 lakh crore, Cheema stated that this was among the highest dividend transfers ever made by the RBI.
Expressing concern over the impact on the central bank’s financial strength, Cheema said, “While reducing the fiscal deficit is important, it must not come at the cost of weakening the financial strength and institutional firepower of the Reserve Bank of India.”
“RBI serves as the nation’s economic shock absorber and monetary stabilizer during periods of crisis. Excessive extraction of reserves may weaken the long-term resilience and economic immunity of the country,” he added.
Flagging increasing fuel prices, inflationary pressures and repeated calls for austerity, Cheema said the extraordinary transfer raises concerns. He said that “such windfall gains are currently kept outside the divisible pool of taxes shared with the states.”
“If the Union Government is facing economic pressures due to global uncertainties and supply shocks, the states are facing the same challenges. Extraordinary gains of this nature should be shared with the states in the spirit of cooperative federalism and fiscal fairness,” he added.
Cheema suggested that “the central bank must preserve adequate reserves and policy flexibility to safeguard financial stability,” he added.
Cheema urged the RBI’s leadership to ensure that the institutional independence and strength of the central bank “remain paramount”. “India cannot aspire to build a strong and resilient economy with a weakened central bank.”
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