Central Banks Like RBI Tend to ‘Build an Empire’, Sometimes at the Cost of Public Interest

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In The Media

Carnegie India

Central Banks Like RBI Tend to ‘Build an Empire’, Sometimes at the Cost of Public Interest

Due to its expansive role, the Reserve Bank of India (RBI) is a site of many conflicts.

By Suyash Rai

Published on Aug 28, 2019

Source: Print

Philosopher John Anderson once suggested that for a public institution, instead of asking “what end or purpose does it serve?”, we should ask, “of what conflicts is it the scene?”

Due to its expansive role, the Reserve Bank of India (RBI) is a site of many conflicts.

A conflict that has recently come to the fore is about the RBI’s surplus income. The main source of this income is the sovereign power to issue currency. The RBI purchases securities with currency, and after accounting for the cost of producing and distributing currency, this generates a huge surplus. Before giving dividend to the government, the RBI sets aside money for operational expenditure and for reserves to cover losses in the future.

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This article was originally published by the Print.

About the Author

Suyash Rai

Former Fellow, Carnegie India

Suyash Rai was a fellow at Carnegie India. His research focuses on the political economy of economic reforms, and the performance of public institutions in India.

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Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

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