Arun Jaitley says no RBI funds needed to meet fiscal deficit target

New Delhi: Finance Minister Arun Jaitley clarified on Saturday that the government does not need any extra funds from the Reserve Bank of India (RBI) or any other institutions to meet the fiscal deficit target. He could have clarified to put an end to the speculation past one month on the government twisting the RBI arms to give it the excess capital it is holding.

Jaitley’s clarification came in an interview with the Times Now TV channel. He noted that the extra funds that may accrue to the government from the new capital framework being worked out for the RBI would be for the future governments to use. It can always be used for poverty alleviation programmes, he said.

He said the central banks world over have a capital framework to determine the amount to be maintained by them as reserves. “All we are saying is that there has to be some discussion and some norms under which the RBI will have a capital framework,” he said.

Early this week, the board of governors of the RBI agreed to set up a committee to decide the appropriate level of reserves that should be maintained by it. The committee is to examine the Economic Capital Framework (ECF) that Jaitley was referring to.It is, however, now five days that the committee has not been constituted because of reported haggling between the govt and RBI on who should be its members.

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