The final decision on transferring a part of the excess reserves to the government has to be that of the Reserve Bank (RBI) alone and any attempt to take away its autonomy could pose a risks to the economy, warns former chief economic advisor Kaushik Basu.

The comments come wi­thin two days of ex- RBI governor Raghuram Ra­jan cautioning that tra­n­s­fer of the reserves may bri­ng down the rating of the RBI.

“There is scope for transfer of excess reserves of the RBI to the government, but it has to be the RBI’s decision...You can’t do that by confiscation by the government. If the RBI says no, it understands why it is not saying so,” Basu, the C marks professor of International Studies at Cornell University, US told PTI here on Wednesday.

He said decision on su­ch important matters has to be taken in consultation with RBI only. “I think this ki­nd of thing has to be completely with the governme­nt talking to the RBI and the final say on this has to be that of RBI. “If you don’t do that, and if you try to take away th­eir autonomy, you are ta­k­­­ing a huge long-term risk with the economy,” Basu, who was also a past chief economist with the World Bank, said.

The issue of parting with a portion of RBI res­e­r­v­es, which as of June stood at Rs 9.43 trillion, to the go­v­ernment has been a cont­e­ntious issue between the government and the RBI for a long time, and one of the key reasons for the sudden resignation of Urjit Patel on December 10.

A major portion of the reserve comes from the currency and gold revaluation account (Rs 6.91 trillion) and the contingency fund (Rs 2.32 trillion).

At the November 19 me­eting, the central board of RBI had decided to cons­titute a panel of exp­e­rts to examine an econ­o­m­ic capital framework (E­CF), the membership and terms of reference of which will be jointly determined by the government and the RBI.

The committee, which is yet to be formed, as the past governor Urjit Patel had differences with the name of the chairman, will determine the appropriate levels of reserves the central bank ought to hold.

In an interview to a ne­ws channel on Monday, wh­en asked if the transfer of excess reserve could lead to downgrade in RBI rating, Rajan had said, “it could...It de­pends on how much. It may not be an issue now... May be an issue at some point of time. That’s one concern”.

Rating downgrade of the RBI from ‘AAA’ would make borrowing costlier for the central bank and will have implication for the entire economy.

Earlier in the day, add­r­e­ssing the 60th labour econ­omic conference, organised by the Indira Gandhi Institute of Development Research (IGIDR) here, Ba­su said as per the global standards the 7.4 per cent growth rate is good and te­r­m­ed the 8 per cent annual growth between 2003 and 2011 as “outstanding”.