Question 2GS3GS3
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.
Introduction
Currently India has a fiscal deficit of 4.9% of GDP
10 words
Main Body
Currently India has a fiscal deficit of 4.9% of GDP. [Budget 2025-26] aims to reduce it to 4.5% of GDP. RBI's Surplus Transfers can play a crucial role in achieving this target. # SIGNIFICANCE OF RBI'S SURPLUS TRANSFERS 1) Greater fiscal space to GovernmentComplements the revenue side of budget. 2) Promotes Welfare PolicyAs surplus funds can be utilized for public welfare (Article-38). 3) Fills the Revenue Gap However, NEGATIVE IMPLICATIONS TOO i) May lead to fiscal imprudenceAdditional funds may lead to reckless spending. ii) Increase dependencyIn the long term government may become over-dependent on RBI Transfers. iii) Disincentivises Tax ReformsAs sustained funds from RBI available. iv) Outcome BudgetingSo that RBI's surplus funds are utilized in an effective way. v) Continue the tax ReformsTo prevent evasion. Thus, Need is to utilize the RBI's surplus Transfers in the best possible way for Inclusive and Prosperous India
158 words1 paragraphs
Conclusion
Thus, Need is to utilize the RBI's surplus Transfers in the best possible way for Inclusive and Prosperous India
19 words
Topper
Rasneet Kaur
AIR 51
Subject & Paper
GS3GS3
Topic
Economic Development
Government Budgeting
RBI surplus transfers and fiscal policy
Writing Stats
187
Total words
1
Paragraphs
critical and analytical
Tone