The Reserve Bank of India’s latest transfer of a record surplus to the central government for 2024-25 has sparked intense debate—ranging from good to bad. Over the years, significant surplus transfers by the RBI have helped the government manage its fiscal deficit and borrowings more effectively.However, what makes these massive transfers noteworthy is not just their magnitude but the complex mix of macroeconomic, monetary, and institutional dynamics that underpin them. The story is not merely about large surpluses but about how a central bank must constantly balance its operational independence, policy objectives, accountability to the government and the public and, last but not the least, the political economy compulsions.
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