Massaging the balance sheet.

"As widely anticipated, the Reserve Bank of India (RBI)...raised the benchmark repo rate by 50 basis points to 4.90% to tamp down rising inflation, governor Shaktikanta Das announced," HT. In May, "In a surprise move, the Monetary Policy Committee (MPC) of the RBI...unanimously decided to increase the repo rate by 40 basis points (bps) in an off-cycle meeting, citing inflation concern," BS. Repo rate is the rate at which the RBI lends to commercial banks, ET, and sets the base for the rate of interest paid by banks on term deposits and also the rate of interest banks charge on loans made to businesses and to the public. "This was followed by a 50 bps hike in the cash reserve ratio (CRR)" to 4.5% which is expected to drain out Rs 87,000 crore (Rs 870 billion) liquidity from the banking system. The CRR "is the percentage of cash that must be retained in reserves in relation to a bank's total deposits" "so that they can be provided for clients in an emergency", India Today. If it was an emergency meeting why raise by only 40 bps and not 50 bps? Gives the impression of being completely clueless. "Our rate and other actions (today) are calibrated to the evolving inflation-growth dynamics. Inflation must come down, economic recovery must also continue," Das told reporters. Sorry, but RBI is not the government and growth is not its business. "The RBI also revised upwards its inflation projection to 6.7 percent for 2022-23 from an earlier projection of 5.7 percent made in April." Shows how clueless it is. On 25 February, Nomura analysts Sonal Verma & Aurodeep Nandi wrote that there is a 15% chance that the RBI could be right in ignoring inflation, a 50% chance that it would be forced to control inflation and a 35% chance that it would go on tolerating high inflation in which case they saw a potential for stagflation, wrote Andy Mukherjee. "Fiscal dominance occurs when the government's finances - for instance the cost at which it borrows - take priority and force the monetary authority's (RBI's) hand on interest rates, hurting its power to fight inflation." Previous governors Raghuram Rajan and Urjit Patel left because of friction with the government but Das has been extra cooperative. However, in May the RBI paid a much lower dividend to the government. "While income for 2021-22 increased by 20%, expenditure rose by 280%, which resulted in the overall surplus transferred to the government decreasing 69% to Rs 30,307.45 crore (Rs 303.0745 billion) from Rs 99,122 crore (Rs 991.22 billion) in 2020-21," ET. Is the RBI balancing its books in the interest of the nation? No chance. "Critically, even this reduced dividend has been made possible by the central bank simultaneously selling $97 billion from its foreign-currency reserves in the spot-market and buying $114 billion. Ignore the purchases. Each dollar that's sold is valued its weighted average cost of acquisition in the past. Since that figure is lower than the current exchange rate, selling dollars for around 78 rupees today means a profit, which is then shared with New Delhi." Hiding losses to show a profit, or massaging the balance sheet, is what Lehman Brothers did, Reuters. That led to the global financial crisis of 2008, Investopedia. This time the crisis will be only in India.