Sri Lanka shows the RBI.

"The Reserve Bank of India (RBI) has announced a record dividend payout of Rs 2.87 trillion to the government for FY2026-27." "The RBI's surplus transfers alone contributes nearly 91% of the budgeted non-tax revenue under the category of 'dividend/surplus from the RBI, nationalised banks and financial institutions' for FY27." For context, telecommunication company Airtel, with 424.5 million customers in India, 166.1 million in Africa, 56.4 million in Bangladesh and 21.3 million in Sri Lanka, reported a net profit of Rs 264.573 billion on consolidated revenue of Rs 1.815 trillion in 2024-25. assets.airtel.in. About 14.6% profit. For FY2026, Reliance Industries, India's largest industrial group, reported gross revenue of $124 billion and profit after tax of 10.1 billion (ril.com), which comes to about 8.15%. These are private sector companies whose aim would be to expand their businesses and increase revenue and shareholder value. Granted the RBI is the bank for the government, which projected a fiscal deficit (revenue less than  expenditure) of around Rs 17 trillion (prsindia.org), how is it able to generate over Rs 2 trillion in profits? "Generation of profits or surplus is not a goal for central banks," said RBI Governor Sanjay Malhotra. On interest rates he said, "Our primary mandate is inflation. It is price stability. And it continues to be price stability, while keeping in mind the objective of growth." Price stability affects every Indian, especially poor people. "The Oil Marketing Companies (OMCs) increased the petrol prices by Rs 2.61 per liter and diesel prices by Rs 2.71 per liter.., marking the fourth hike in less than two weeks. With the latest revision, cumulative increases in petrol and diesel prices are almost Rs 7.5 per liter since fuel rate revision resumed on 15 May." ET. Increasing cost of transport is sure to push prices of goods and services upwards. In addition, the Indian rupee has dropped from about 90 to one US dollar on 1 January 2026 (exchangrates. org.uk) to 95.76 to one USD this morning (xe.com) which will increase prices of all imported goods. The RBI started reducing interest rates from February 2019 when the consumer price index (CPI) inflation was at 2.65% (rateinflation,com) and continued to cut interest rates even though CPI inflation spiked to 5.53% in November and to 7.32% in December 2019, bringing down to 4% in May 2020 and holding it at 4% till My 2022, even as inflation raged at over 6.5% (shriramfinance.in), and raising it in panic only because the US Federal Reserve raised its Funds rate by 25 basis points (bps) in March 2022 and was expected to increase it by 50 bps in May 2022 (Forbes). The RBI's commitment to price stability does not inspire confidence. Starting in December 2024 the RBI has slashed its interest rate by 125 bps to 5.25%. To support the rupee the RBI collected $4.2 billion from dollar-denominated Resurgent India Bonds in 1998, $5.5 billion from India Millennium Deposits in 2000 and $30 billion from FCNR(B) swap window in 2013, wrote Ashish Gupta. "Today, with rupee breaching 96 to dollar, oil above $100 and CAD widening, whispers of a similar 'bazooka' are growing." In 2013, with US rates effectively at zero, Indian banks paid 2-3% for short-term deposits and 3-4% for long-term deposits. Now the Federal Funds rate is at 3.5-3.75% so Indian banks will have to pay in excess of 6% interest and, with around $700 billion in reserve, raising $30 billion will make little difference. "A rate hike is a much more potent defence," said Gupta. Higher rates will be anathema to the government but Sri Lanka may have taken some of its steam away. "Sri Lanka's central banks stunned markets by raising its policy rate by an outsized 100 basis points yesterday, and signaled more tightening as surging energy costs whip up inflation and batter its currency." Reuters. The shows independence and guts. Over to the RBI. And Mr Malhotra.