Government not seeking RBI reserves to meet fiscal deficit, says Arun Jaitley

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Finance Minister Arun Jaitley on Monday said the government was not seeking Reserve Bank surplus to meet fiscal deficit but to utilise them for
accelerating poverty alleviation programmes and recapitalising the state-owned banks.

Replying to a debate on the second batch of supplementary demands for grants in the Lok Sabha, the minister said that the Modi government has the best track record of keeping fiscal deficit under check.

The House later passed supplementary demand for grants for the current fiscal to provide additional expenditure of Rs 85,948.86 crore, about half of which is for capital infusion in public sector banks.

Referring to the issues concerning the Economic Capital Framework (ECF) of RBI, Jaitley said that central banks of most of the countries keep a reserve of 8 percent, while some conservative central banks maintain 14 percent reserves.

The RBI was maintaining a reserve of 28 percent, he said, adding the expert committee will decide on the appropriate reserve of the central bank so that surplus funds could be utilised for funding poverty alleviation programmes and recapitalising the state-owned banks.

“This government has the best track record than any other previous government in managing fiscal deficit. We do not need RBI reserves to manage the fiscal deficit, Jaitley said. He said the Modi government has brought down fiscal deficit and kept inflation and the Current Account Deficit
(CAD) under check, while India retained the fastest growing economy tag for 5 years.

The finance minister further said that it was only during the Modi government tenure that India became the fastest growing major economy in the world, ahead of China. Jaitley also said that demonetisation and the Goods and Services Tax (GST) has helped increase the tax base and allocate more funds for poverty alleviation and social sector programmes.

The number of Income Tax return filers have gone up from 3.8 crore during the UPA regime, to 6.86 crore currently. When the NDA government completes its five-year term in 2019, the number would double from 3.83 crore, he added. With regard to concerns expressed by some members over the agrarian situation, Jaitley said the government will take all steps to support the farmers.

“Whatever steps need to be taken at the end, the government will take it,” he said, amid sloganeering by Congress over the Rafale issue.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow