RBI reserve should be used to fix financial system: Subramanian


Team Udayavani, Dec 14, 2018, 11:55 AM IST

Bengaluru: The Reserve Bank is adequately capitalised, but the money should be used for fixing the financial system, not for financial deficit or financing government expenditure, Former Chief Economic Advisor Arvind Subramanian has said.

The economic principles, moreover, say savings should not be used for current consumption, but for long-term investment, he said Thursday.

“If the reserve is used for deficit financing that would amount to raiding RBI and I would be extremely dissatisfied and disappointed with it,” he said, adding the central bank probably is massively capitalised, but the money should be used for fixing the financial system, not for financial deficit or financing government expenditure.

“Also, it should be done cooperatively, not adversarily,” he added. He further said the government could have found a way to solve its differences by setting up a panel, which hopefully would have shared the belief of not using the RBI reserve for deficit financing.

The Reserve Bank of India (RBI) has Rs 9.59 lakh crore reserves and the government, if reports are to be believed, wants the central bank to part with a third of that fund — an issue which along with easing of norms for weak banks and raising liquidity has brought the two at loggerheads recently.

Responding to a PTI query on the comments on RBI Board Member Swaminathan Gurumurthy’s induction, he said: “I think, he (Gurumurthy), amongst others, has articulated new alternative conceptions. I think we have to engage with that to run an economy. All of us, me included, would plan to engage with that vision. I promise I will engage with that”.

Gurumurthy should try avoiding being a party to build a perception of politicising RBI board appointments, the former CEA said.

Subramanian was in the city to read some the excerpts from his book – Of Counsel: The Challenges of the Modi-Jaitley Economy. On the Swadeshi vs Videshi debate, he said both extremes should be avoided because finance theory talks about diversification.

“India needs a portfolio. You get your Swadeshi and Videshi economists, but evaluate them on their merits. Finance theory talks about diversification,” the former CEA said.

Udayavani is now on Telegram. Click here to join our channel and stay updated with the latest news.

Top News

Civic workers protest: Govt issues assurance letter, protests end

IAS officer J Manjunath arrested on charges of corruption

16 people get life imprisonment in Barakali killing

Goddess Durga idol floats to shore, builds curiosity among locals

Man who entered Mamata’s residence says he thought it was Kolkata Police HQ

Pope denies resignation rumors, hopes to visit Kyiv, Moscow

Sri Lanka’s opposition JVP asks govt to share details on alleged bomb threat


Related Articles More

Gujarat, Karnatka among best states in providing strong ecosystem for startups: DPIIT ranking

HDFC and HDFC Bank merger proposal gets nod from bourses

Discoms outstanding dues to gencos rise 4 pc to Rs 1.32 lakh cr in June

Taxpayers face issues accessing e-filing portal; Infy taking measures, says IT dept

Reliance Industries stock tumbles over 7 pc; ONGC tanks more than 13 pc

MUST WATCH

Tourist gathering, Road Block at Charmadi Ghat

Heavy Rain at Kalasa : Horanadu Kalasa Road Block

NEWS BULLETIN 03-07-2022

The deer swallowed 80 kg. A python weighing 14 feet long!

Vitla College Student doing Good Job


Latest Additions

Civic workers protest: Govt issues assurance letter, protests end

IAS officer J Manjunath arrested on charges of corruption

16 people get life imprisonment in Barakali killing

Finmin to hold first Arun Jaitley Memorial Lecture on July 8

Ranaut appears before Mumbai court in Javed Akhtar defamation case; proceedings take place behind closed doors

Thanks for visiting Udayavani

You seem to have an Ad Blocker on.
To continue reading, please turn it off or whitelist Udayavani.