What would a householder do when its expenses threaten to outstrip income? Dip into reserves, of course. The Indian government is not above this behaviour either. Hence when it looked like its fiscal math was too difficult to manage, the government seems to have hit upon a new reserve, called the Reserve Bank of India (RBI).
The latest string of arguments from the government including tweets of the economic affairs secretary suggest that the government wants to open the debate on whether RBI is over capitalized. The niggling suspicion is it’s a technical way of demanding more money.
What is the government risking in making such an imprudent advance towards the central bank?
It is risking a signal that says the strongest of the public institutions of the country are not safe from the government’s impulsive attempts to garner funds.