Indian Express Editorial Summary

Editorial Topic : RBI Transfers Record Surplus to Government

GS-3 Mains Exam : Economy

Revision Notes

 

Question : Critically analyze the factors contributing to the higher surplus transfer by the Reserve Bank of India (RBI) to the government this fiscal year.

Amount: Rs 2.1 lakh crore (surplus transferred to government)

Significance:

• Higher than anticipated – government estimated Rs 1.02 lakh crore in budget.
• Strengthens government finances.

RBI Buffer:

• Increased contingency risk buffer to 6.5% of balance sheet (from 6% in 2022-23).
• Acts as a financial stability buffer for unforeseen crises.
• Based on Bimal Jalan Committee recommendations.

Bimal Jalan Committee Recommendations:

• Clearer distinction between realized equity (usable for losses) and revaluation balances (market gains not distributable).
• Expected Shortfall (ES) methodology for measuring market risks.
• Contingent Risk Buffer (CRB) target range of 6.5% to 5.5% of balance sheet.
• Surplus distribution only when realized equity exceeds required level.
• Periodic review of economic capital framework (every 5 years).

Why High Surplus for RBI This Year?

Possible Reasons for Higher Transfer:

• Increased interest income from domestic and foreign assets, forex transactions.

How Can Government Use the Surplus?

• Fiscal Space: Creates room for additional spending in the upcoming full budget (post-election).
  • Reduce fiscal deficit further (current target: 5.1% of GDP in 2024-25).
  • Offset potential revenue shortfalls (e.g., disinvestment).
  • Increase capital expenditure (current budget: 3.4% of GDP).
• Market Impact: 10-year bond yield already shows a decline.

Government’s Fiscal Strategy:

• Committed to fiscal consolidation (reducing deficit).
  • Target: Bring deficit below 4.5% of GDP by 2025-26.
• Increasing capital expenditure alongside deficit reduction.
  • Capex to GDP ratio:
    • 2.5% in 2021-22
    • 3.23% in 2023-24
    • 3.4% in 2024-25 (interim budget)

Conclusion:

• RBI’s surplus transfer creates an opportunity for the next government.
• Options: Reduce fiscal deficit or increase capital spending.

 

 

Indian Express Editorial Summary

Editorial Topic : Pune Accident Raises Concerns

GS-3 Mains Exam : Economy

Revision Notes

Question : Analyze the lessons learned from the Pune case and propose stricter measures to prevent future tragedies related to underage drinking and driving.

Incident:

• Two deaths (Aneesh Awadhiya & Ashwini Koshta) in Pune car crash on May 19.
• Alleged driver: 17-year-old under the influence of alcohol.

Public Outrage:

• Anger over initial bail conditions (work with traffic police & write essay).
• Concerns about due process and potential influence due to suspect’s background (father is a prominent realtor).

Demands:

• Thorough investigation into the accident.
• Fair and impartial application of the law, regardless of the accused’s background.

Key Issue:

• Balancing due process with public demands for justice.

Pune Case Aftermath

Following Public Outrage:

• Police booked teen’s father for allowing him to drink and drive.
• Sealed 2 restaurants that served alcohol to the minor.
• Arrested 3 people from the establishments.

Looking Ahead:

• Over 50% of India’s population is under 25.
• Need for a wider conversation on underage drinking and driving.
• This should involve:
  • Bars/pubs/alcohol sellers
  • Young people
  • Parents

Learning from Pune:

• Hold individuals accountable (Pune case).
• Implement stricter measures to prevent future tragedies.