Covid has shifted policy efficacy away from RBI
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The pandemic has shifted concern away from the annual surplus that our central bank shares with the government, after it deducts the year’s expenses from its income, to how well New Delhi spends public money. On Friday, the Reserve Bank of India (RBI) declared a transfer of ₹99,122 crore to its owner for the last three quarters of fiscal 2020-21, having adopted an April-March cycle. Stretched to four quarters, that would amount to more than twice the payout it made the year earlier, ended June 2020. Yet, given the acute need of funds for our health emergency, it can’t help the Centre much. The irony here is the bonanza turned over by RBI just before covid struck. In August 2019, it gave the Centre ₹1.76 trillion for 2018-19, up from ₹50,000 crore the previous year. This hike had raised suspicions of RBI being pressed by the Centre to part with the money it usually held back as ‘provisions’ (ma