Spending during the festival season is the best index.

The Reserve Bank of India (RBI) is transferring Rs 30,659 crore of its surplus to the government for financial year 2016-17 (July-June), less than half of the Rs 65,876 crore it had transferred in the previous year, and substantially lower than what the government had estimated in its budget document (Rs 58,000 crore)," wrote T Bandophyay. The RBI earns this surplus through Open Market Operations, to control money supply, by earning interest on foreign securities, such as US Treasuries, through short term lending to local banks and through seigniorage, which is the money it earns through printing currency. Previously the RBI used to transfer 53.40% of its surplus to the government, saving the rest for unforeseen emergencies, but now it is compelled to transfer the entire amount. So why did the RBI earn less this year? Because prices of foreign securities, especially US Treasuries, have fallen, so the RBI has to reduce the value of its holdings according to market prices. The rise of the rupee has reduced the market price of its foreign currency holdings. The dollar bought Rs 67.32 in July 2016 but in June 2017 it fell to Rs 64.58, so the value of foreign holdings of the RBI has fallen by 4.25%. Printing and distribution of new currency notes and the cost of reducing the flood of money that poured into banks, through its Market Stabilization Scheme, during demonetization increased expenses What were the benefits of demonetization? Direct tax collections were higher, money deposited during demonetization is under scrutiny for tax evasion, digital payments have increased and more people are investing in stocks. The Prime Minister claimed yesterday that Rs 1.75 trillion is under scrutiny which means nothing because we don't know how much of it will turn out to be genuine. He knows people have short term memory so no harm in tall claims. Foreign funds have poured $7.8 billion into Indian stocks and local mutual funds have seen huge collections, wrote A Mukherjee. Higher use of cards maybe because of rising number of people shopping online, and this will rise as more people get access to broadband. RBI survey points to rising pessimism among people about jobs, earnings and economic conditions, and industrial production is going to remain slow. The State Bank of India, the backbone of our banking system, is gradually freezing up as it is hamstrung by bad loans worth a whopping Rs 5 billion. The festival season is about to start. Should we spend, or cling on to whatever we have?