Question 2Critically examineGS3GS3
The Reserve Bank of India's surplus transfers offer the government much-needed fiscal space, yet they are not without challenges. Critically examine the implications of the RBI's surplus transfers to the government.
Main Body
Recently, RBI transferred a huge surplus to the government (second highest) according to recommendations of Bimal Talaksan Committee (5-8% revenue buffer). Increased fiscal space to government: 1. Better fiscal consolidation - Fiscal deficit4.8% 2023-24 to 2024-25 2. Increased allocation to welfare schemes - (G1) PM-MUDRA Loans 3. Better revenue utilization 4. Productive assets creation Challenges associated: 1. Reduces buffer of RBI (5-5%): 2. Increased dependence of government on external resources 3. Reduced efforts at subsidy rationalization(NTIS GST) crude subsides 2023-24 4. Revenue deficits still not under FRBM mandate1.52% Implications of RBI's surplus transfer: 1. Better utility of exchequer at disposal 2. Increased capital expenditure - Capex2020 & Economic Survey3 returns) 3. More allocation to productive assets creation(Lands Economic Survey3 returns) However, variances ahead: 1. Government should develop own tax base & tax enhance (tax to GDP ratio) - Presently 11.4% 2. Hinders RBI's ability to understand turbulent global economy - Home, RBI Surplus is a much-needed cushion for attaining $ stallion farming
Reduced efforts at subsidy rationalization(NTIS GST) crude subsidies 2023-24 4. Revenue deficits still not under FRBM mandate1.52% Implications of RBI's surplus transfer: 1. Better utility of exchequer at disposal 2. Increased capital expenditure Capex2020 & Economic Survey3 returns 3. More allocation to productive assets creation(Lands Economic Survey3 returns) However, variances ahead: 1. Government should develop own tax base & tax enhance (tax to GDP ratio) - Presently 11.4% 2. Hinders RBI's ability to understand turbulent global economy - Home, RBI Surplus is a much-needed cushion for attaining $ stallion farming
278 words1 paragraphs
Topper
VISHWAJEET GUPTA
AIR 67
Subject & Paper
GS3GS3
Topic
Economic Development
Government Budgeting
RBI surplus transfers and fiscal implications
Writing Stats
278
Total words
1
Paragraphs
Analytical
Tone