Dr Jalan Panel and Transfer of Reserves of RBI to Government .

It appears from the press reports that prima facie  the recommendation of the Dr Jalan Committee on the transfer of RBI reserves to the Government is on expected lines in the sense that while the Government  is entitled to have its share of RBI surplus but the committee does not appear well convinced  of the way the Government intended and  demanded to get the entire Reserves transferred in one lot perhaps to cover up its failures on the economic front .No doubt the Government  as Owner of RBI and having its dominance on RBI by virtue of having all members of RBI Board appointed by the Government,  is entitled to have the surplus technically and politically, but  RBI being set up as an independent Organisation under a special statute, has certain unique role and responsibilities to deliver taking care of  predominantly the Government's interest, the economy and protect the nation from the national and international calamities arising out of political economic social and technological changes and dynamics. The Committees' recommendation though not fully disclosed with regard to the quantum of reserves to be transferred (as per the press reports version) is something very vital and its approach to transfer the reserves over a period of time needs to be underlined for its Reservations and perhaps Hesitations to transfer entire reserves in one lot. No Central bank worth its name and reputation can do this in the Sovereign Interest and in the interest of having a strong Financial system to support the growth of the economy based on the sound  economic policies  expected from a popular Government without much of damage to the entire fiscal position. The Committees' Recommendations should work as a major signal to the Government to leave alone RBI as an independent Organisation and to enjoy the surplus of income it makes prudentially in a manner without detrimental to the Financial  System Stability of the nation and without ignoring the need to have a  financially sound Central Bank to take the economy forward and strong and project inter alia  an image of the nation among other powerful nations and Independent Central Banks. 

Dr T V Gopalakrishnan

( Personal views and Comments given to Business Standard dated 18th July 2019)