INSUBCONTINENT EXCLUSIVE:
official has opposed and delayed proposals from a Reserve Bank of India (RBI) panel that the central bank keep most of its so-called "excess
reserves" rather than hand them to the central government, sources familiar with discussions said.The sources said the move was made by
Finance Secretary Subhash Chandra Garg, one of six panel members, but it was not immediately clear if it could block the proposals or lead
to changes in them.Mr Garg and the finance ministry did not reply immediately reply to emails from Reuters seeking comment.Earlier, the
government of Prime Minister Narendra Modi indicated that the RBI has excess reserves of more than Rs 3 lakh crore ($43.22 billion), or 30
per cent of total reserves of around Rs 10 lakh crore.The government is particularly keen to find a way to get the excess reserves as it
needs funds to stimulate a weakening economy hit by sagging consumption at a time tax collections have fallen short of target.The sources
said the panel's report, originally anticipated in April, has been delayed for a fourth time and now is expected after the Budget on July
5.The uncertainty around the panel's recommendation will make new Finance Minister Nirmala Sitharaman's task of funding the fiscal
deficit harder as she is set to present the Budget
She will need to account for the RBI's dividend expectations for the year without knowing the final figure.Balancing needsThe sources said
Mr Garg has not given his backing to the conclusions by the other members as he thinks the figure they are talking of transferring to the
government is too small."One person has been dissenting
Garg wants higher money to be transferred and has the right to have that view we all agree that RBI has excess funds but we can't take the
entire fund and transfer it," one source said.The panel has tried to balance economic growth needs and the unforeseen risks that the RBI
might face, this source said.The sources also said that the panel has created a space for a dissent note in the report, though Mr Garg has
not agreed.The panel was set up in December following heated discussions over revamping the framework that guides the amount of profits the
RBI shares with the government through a dividend
The argument was one of the key reasons for Governor Urjit Patel's sudden resignation late last year.Deputy Governor Viral Acharya, whose
resignation was only disclosed on Monday, had also defended the RBI's excess reserves and warned against any transfers to the
government.The sources said the transfer of funds from the RBI would start in the current fiscal year, which ends in March 2020, and
continue for at least two more years.
