Punjab Finance Minister raises concern over RBI's Rs 2.87 lakh crore transfer to Centre

The Punjab Finance Minister Harpal Singh Cheema said that the RBI should keep stronger financial reserves during a time of global uncertainty and pressure on currencies.

Punjab Finance Minister Harpal Singh Cheema on Friday raised concerns over the Government of India receiving nearly Rs 2.87 lakh crore from the Reserve Bank of India as dividend. He warned that taking such a large amount from the RBI could weaken the central bank’s financial strength and reduce the country’s long-term economic stability during difficult times and global financial uncertainty.

Harpal Singh Cheema questions RBI dividend transfer

Harpal Singh Cheema referred to reports saying that the RBI transferred nearly Rs 2.87 lakh crore to the Union Government from its total income of around Rs 4 lakh crore.

He said this was one of the highest dividend transfers ever made by the RBI since it was established.

Punjab minister raises concerns over states’ share

The Finance Minister said people are already dealing with high fuel prices and inflation. He added that the large transfer raised serious concerns.

“First, such windfall gains are currently kept outside the divisible pool of taxes shared with the states. If the Union Government is facing economic pressures due to global uncertainties and supply shocks, the states are facing the same challenges. Extraordinary gains of this nature should be shared with the states in the spirit of cooperative federalism and fiscal fairness,” he stated.

Harpal Singh Cheema warns about weakening RBI

Cheema also expressed concern about the impact on the RBI’s financial strength.

“While reducing the fiscal deficit is important, it must not come at the cost of weakening the financial strength and institutional firepower of the Reserve Bank of India. RBI serves as the nation’s economic shock absorber and monetary stabilizer during periods of crisis. Excessive extraction of reserves may weaken the long-term resilience and economic immunity of the country,” he said.

RBI should keep stronger reserves: Cheema

The Punjab Finance Minister said that the RBI should keep stronger financial reserves during a time of global uncertainty and pressure on currencies.

“The central bank must preserve adequate reserves and policy flexibility to safeguard financial stability,” he added.

Cheema urges RBI to protect its independence

Harpal Singh Cheema also urged the RBI leadership to protect the institution’s independence and credibility.

“I urge the RBI Governor to ensure that the institutional independence, strength and long-term credibility of the Reserve Bank of India remain paramount. India cannot aspire to build a strong and resilient economy with a weakened central bank,” he said.