ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Budget DeficitSubscribe to Budget Deficit

Central Bank Profits in National Accounts

For macroeconomics, the government is divided into the central bank and the treasury. Positive profits recorded by the first are cancelled out as a negative item in the second. However, a debate has been generated by the transfer by the Reserve Bank of India of a record surplus to the coffers of the overnment. The issue is examined in a stock-flow-consistent model. A tension is found to reside in the pledging of profits for advances to banks on the one hand, and reducing the government budget deficit on the other. In the case of India, we conclude that central bank profits are intended to substitute for taxation.

Impact of Fiscal Deficit

Fiscal Deficit and Inflation in India: A Study in Nexus by Ashutosh Raravikar; Macmillan India, 2003; pp x+252, Rs 385
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