Harpal Singh Cheema says central bank’s financial buffer and autonomy must be protected

Punjab Finance Minister Harpal Singh Cheema on Friday asked the Union government to share the Reserve Bank of India’s record surplus transfer with states, saying such receipts should be viewed through the principles of cooperative federalism and fiscal fairness.

In a statement issued in Chandigarh on May 23, Cheema raised concerns over the transfer of nearly ₹2.87 lakh crore from the RBI to the Centre for the accounting year 2025-26. He said the amount was among the highest surplus transfers made by the central bank and called for a wider discussion on how such gains are used at a time when states are also dealing with fiscal pressures.

Cheema said the transfer raised three key questions, including whether extraordinary gains received by the Union government should remain outside the pool of resources shared with states. “If the Union government is facing economic pressures due to global uncertainties and supply shocks, the states are facing the same challenges. Extraordinary gains of this nature should be shared with the states in the spirit of cooperative federalism and fiscal fairness,” he said.

The Finance Minister said states were dealing with the fiscal impact of inflation, higher input costs and welfare commitments, and therefore deserved a share in large non-tax receipts of this nature. He said the present arrangement gave the Centre a fiscal cushion even as states faced similar economic pressures without a corresponding benefit.

Cheema also cautioned against any approach that could reduce the central bank’s ability to respond to economic shocks. “While reducing the fiscal deficit is important, it must not come at the cost of weakening the financial strength and institutional firepower of the Reserve Bank of India,” he said.

He described the RBI as an institution that plays a key role in monetary stability and crisis management. “RBI serves as the nation’s economic shock absorber and monetary stabilizer during periods of crisis. Excessive extraction of reserves may weaken the long-term resilience and economic immunity of the country,” Cheema said.