Bimal Jalan Committee Current Affairs - 2020

GoI misses its disinvestment target

Government of India misses its disinvestment target as the plan to sell Bharat Petroleum Corporation Limited (BPCL), Air India and Container Corporation of India has not been succeeded.

Highlights

The Government had planned to sell 53.3% of BPCL, 31% of Concorp as per latest market prices. The Government had set the Disinvestment target of Rs 1.05 trillion for the year 2019-20. However, it was only able to extract Rs 17,364 crores. This has increased burden on the economy of the country as the fiscal deficit of the Government has already touched 115% of the budget estimated for the year 2019-20 as far as November 30. The deficit will increase further as there are another 4 months (Dec-Mar) to go before the financial year ends. The data was released by the Controller General of Accounts.

The missing of disinvestment target has impaired its ability to meet its Fiscal Deficit target of 3.3% of GDP. The fiscal deficit is arising in spite of RBI transferring Rs 1.76 lakh crore rupees. It was widely criticized as windfall money of the government.

What is Windfall money?

Windfall money is the term used for unexpected money good fortune. The RBI transferred the windfall to the GoI on recommendation of Jalan Committee.

Air India

Among all the disinvestment targets, Air India is the least performing and at huge losses. In order to solve the problem, recently it was announced that Air India will stop issuing tickets to government agencies that owe more than Rs 10 lakh due. This included defence accounts, CBI, BSF, Enforcement Directors, customs commissioners, etc.

RBI Deputy Governor Viral Acharya quits before his term ends

Viral Acharya Deputy Governor of Reserve Bank of India (RBI) has resigned from his position 6 months before the end of his term citing reason as unavoidable personal circumstances.

Acharya, who joined RBI on 23 January 2017 for a three-year term, was youngest deputy governor of RBI post economic liberalisation. He may now return to New York University Stern School of Business (NYU Stern) in August 2020 instead of February 2020.

Key Highlights

RBI Deputy Governor Viral Acharya resignation is second high profile resignation at Reserve Bank of India (RBI). In December 2018 Urjit Patel former RBI governor, also resigned about nine months before end of his schedule term citing personal reasons.

Acharya’s resignation is also significant as he resigned shortly before Bimal Jalan committee is to submit its report on whether RBI reserves could be transferred to Centre government or not.

Mr. Acharya who was in charge of the monetary policy department, created a controversy in October 2018 by strongly alluding to encroachment on autonomy of apex bank of country by government. One of the main tension points he highlighted was treatment of RBI reserves.

RBI is left with only 3 Deputy Governors- N.S. Vishwanathan, B.P. Kanungo and M.K. Jain.

Conflict: Dr. Acharya has been differing with RBI Governor Shaktikanta Das in last two Monetary Policy Committee (MPC) meetings on both growth and inflation. In latest monetary policy meeting also, RBI Governor Das and Deputy Governor Acharya differed strongly on state of fiscal deficit and how to account for that. Acharya, who was in charge of monetary policy department while ending his term warned of wrath of markets if autonomy of a central bank was compromised.

About Reserve Bank of India

RBI is India’s central banking institution, which controls issuance and supply of Indian rupee.

The RBI began its operations on 1 April 1935 in accordance with Reserve Bank of India Act, 1934. RBI was nationalised on 1 January 1949, after India gained independence on 15 August 1947.

Until Monetary Policy Committee was established in 2016, it also controlled monetary policy in India.