The Reserve Bank has approved Rs 1.76 lakh crore to the Central Government, accepting the recommendations of Jalan Committee. However, after the report of the committee became public, it was revealed that the government was not satisfied with the same amount. The government wanted more money of about 55 thousand crore rupees, but the Jalan committee refused to recommend more than 1.76 lakh crore rupees.
It is worth noting that till June 2018, there was an amount of Rs 36.17 lakh crore in the books of the Reserve Bank. According to the Indian Express, the central government's representative in the committee had demanded a further grant of 1.5 percent of the total fund of Reserve Bank, which was about Rs 54,255 crore.
This demand was in the high risk endurance zone, so the committee headed by Bimal Jalan refused to accept it. The task of the Bimal Jalan committee was to decide how much of its funds the Reserve Bank could give to the government.
Reserve bank of IndiaThe central board of the Reserve Bank on Monday approved the committee's recommendations and the committee's report was made public on Tuesday, a day after that. The committee recommended that monetary and financial stability provisions ranging from 4.5 to 5.5 percent of the ledger can be considered as safe range, but Finance Secretary Rajiv Kumar said that it could be kept at 3 percent. The central government made Rajiv Kumar a member of the Jalan committee on July 30 this year.
The Jalan committee also said that the bookkeeping of the Reserve Bank should be strengthened so that it can help the banks when needed. The committee also suggested that the Reserve Bank should change its accounting year from April to March according to the financial year. At present, the accounting of the Reserve Bank is from July to June.
The Jalan committee wanted a clear division between realized equity (contingency fund or emergency fund) and revaluation balances (CGRA). All kinds of risk should be dealt with the emergency fund and the revaluation balance should not be given to the government. The committee said that the contingency fund should be 6.5 to 5.5 percent of the books of the Reserve Bank.
The Reserve Bank fixed the emergency fund to 5.5 percent. Due to this, the government got an additional amount of Rs 52,637 crore. Apart from this, it was decided to give the surplus of Rs 1,23,414 crore to the government, ie surplus.
