New Delhi: In an attempt to put at rest speculation about the government seeking Rs 3.6 lakh crore from the RBI, economic affairs secretary Subhash Chandra Garg on Friday said that the Centre’s fiscal math is on track and does not require any money from the Central bank.
A “lot of misinformed speculation is going around in the media. The government’s fiscal math is completely on track. There is no proposal to ask RBI to transfer Rs 3.6 or Rs 1 lakh crore, as speculated,” said Mr Garg, adding that the government’s fiscal deficit under the UPA-2 in FY 2013-14 was 5.1 per cent.
“From 2014-15 onwards, the government has succeeded in bringing it down substantially. We will end the FY 2018-19 with FD of 3.3 per cent. The government has actually foregone Rs 70,000 crore of budgeted market borrowing this year,” said the secretary.
The finance ministry official, however, said that the only proposal — concerning RBI reserves that the government was discussing — was to fix an appropriate economic capital framework for the RBI.
This framework would stipulate the amount of reserves that the Central bank should maintain.
This proposal led to a speculation that the government wants to lay hands on a part of the RBI’s massive Rs 9.59 lakh crore reserves. According to some reports, the government wanted the RBI to part with a third of the reserves — an issue, which along with the government’s demand for easing of norms for weak banks and raising liquidity, has brought the two at loggerheads in recent weeks.
In the Economic Survey 2016-17, the then chief economic adviser Arvind Subramanian argued that the RBI was already exceptionally highly capitalised and that it could transfer nearly Rs 4 lakh crore of its capital to the government which can be used for recapitalising the banks and/ or recapitalising a Public Sector Asset Rehabilitation Agency.
The Opposition Congress had alleged that the government was trying to accessing the RBI’s money to dole out “freebies” ahead of the 2019 Lok Sabha elections and had called it “the great Indian robbery”.
Earlier this year, the RBI decided to pay Rs 50,000 crore as a dividend to the government in line with the Union Budget provisions.
