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Modi Government can get Rs 3 lakh crores soon!

Friday - May 31, 2019 2:54 pm , Category : WTN SPECIAL
The government hopes to get Rs 3 lakh crores from the Reserve Bank
The government hopes to get Rs 3 lakh crores from the Reserve Bank

Modi Government can spend a big money received by the RBI in welfare schemes,

MAY 31 (WTN) - After the massive victory in the Lok Sabha Election, the Modi Government can get around Rs 3 lakh crores soon. You may be shocked by reading this that how the Modi Government is going to get such a huge amount. Let's tell you in full detail about this whole case.

In fact, the Reserve Bank of India has buffer capital of more than Rs 10 lakh crores. Modi Government wants to take some part of this capital by referring to some international rules so that it can be used in development work. The government argues that the buffer amount kept by the RBI is not according to the international rules.

Referring to this argument, the Modi Government wants a part of the deposit with the Reserve Bank. A committee under the leadership of former RBI Governor Bimal Jalan has been constituted to give the suggestion for how much of the Reserve Bank's deposits can be given to the government. The meeting of the committee is going to be held on June 13, after which it will be clear that the government can get how much money from the deposits of Rs 10 lakh crores from the Reserve Bank of India. However, Bimal Jalan Committee has not yet finalized its report.

It is speculated that the Jalan committee may recommend of giving 30% of the deposit of the Reserve Bank to the Modi Government. That is, the Modi Government can get around Rs 3 lakh crores from the RBI. For your information, let you know that the 6-member Bimal Jalan Committee was formed on December 26, 2018. The committee was initially given three months time for the report, but later it was extended.

The Modi Government believes that the amount that RBI holds in the form of reserves is not in level with international standards. Bimal Jalan Committee has been constituted to decide the economic capital framework of the RBI only after the debate occurs. This committee has to review the provisions, storage and buffer stock conditions, requirements and justification of RBI. The six-member committee, headed by Bimal Jalan, would recommend that on which basis the RBI should assess the risk and decide how much capital it should have and how much should be given to the government.

Bimal Jalan Committee will suggest in its report that under which provisions how much buffer stock RBI should be kept. The committee will also determine whether the RBI is making provision of surplus or reserve levels, maintenance, stock and buffer stocks. Actually, the finance ministry says that the RBI has buffer capital equivalent to 28 per cent of its total assets, which is much higher than the reserve capital held by central banks globally.

For your information, let the proportion of buffer capital held by central banks in the whole world is 14%, whereas the buffer capital ratio maintained by the Reserve Bank of India is 28%. There was a dispute between the Central Government and RBI on this matter, after which immediate RBI governor Urjit Patel resigned from his post, citing personal reasons.

If the Modi Government gets the amount of Rs 3 lakh crores from the Reserve Bank after the recommendation of Bimal Jalan Committee, it will help the government to allot money for several welfare schemes. It is being said that the capital received by the Reserve Bank can be used in the welfare schemes of the farmers.