Govt's transfer demand for RBI's profits will prove bad for Indian economy
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Government's demand for Rs 3.6 lakh surplus fund transfer and RBI's denial has escalated the tension between the two. RBI earns large profits from interest on the domestic and foreign government bonds. Analysts say that government's demand is not economically sound as it will completely exhaust RBI's contingency funds, eat into the gold and currency assets and require them to print money thus spiking inflation.