RBI sells special drawing rights to pay North Block??!!

One hopes this news is not true. But if it is, then one does not know what to say..

RBI-Fin Min nexus is doing dangerous things and all secretly. One does not know what is going on. After plundering the state PSUs for meeting the fiscal deficit and using all kinds of financial engineering, we have  another one. All this while RBI was worried over quality of fiscal consolidation, but it does not matter anymore. RBI simply might inform you towards the end of the deal on this.

 

So even RBI seems to be joining hands with govt to bail the govt out. In the process, the govt seems to be helping RBI by keeping it out  of election code and keep glorifying oneself. See, I am independent and can do what I wish to.. So, you scratch my back i scratch yours..

One does not even know the purpose of this exercise. The red line for fiscal deficit was 4.8% of GDP which was finally pegged at 4.6% of GDP. So clearly there was room to keep it at 4.8% and not engage in any such engineering/sources of finance.  But as you keep the target at 4.6% of GDP, breaching it would lead to huge issues…

The markets and particularly FIIs are rejoicing over decline in twin deficits. Well, most know the reality but choose not to question the spirit of consolidation.

What Chuck Price said – we will dance as long as music continues, is applicable everywhere..and moreover it does not apply to financial markets alone… all the stakeholders are party to it including the policymakers who do utmost to ensure the music continues..

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