RBI Governor Shaktikanta Das
RBI Governor Shaktikanta Das

New Delhi: As the government's debt manager, the Reserve Bank of India is more concerned with the Centre's borrowing than the fiscal deficit, Governor Shaktikanta Das said on Thursday.

"If you see the Monetary Policy Committee's resolution, there is reference to the fiscal deficit. What RBI is concerned mostly as the debt manager to the government...the RBI is concerned about the borrowing number," Das said, speaking to reporters at the conclusion of the committee's first meeting of 2020.

"In the current financial year, despite the fiscal deficit going up to 3.8%, the open market borrowing number remains the same. And next year, the increase is only by 70,000 crores (700 bln rupees)," the governor further said, adding that he hoped the Centre's borrowing programme "goes through in a non-disruptive manner".

FM Nirmala Sitharaman activated the escape clause provided in the Fiscal Responsibility and Budget Management Act for the current as well as next financial year, increasing the fiscal deficit for the current financial year to 3.8% of GDP.

However, Sitharaman did not announce an increase in the Centre's market borrowing, with the borrowing through small savings schemes for the current financial year revised to 2.40 trln rupees from 1.30 trln rupees.

For 2020-21 (Apr-Mar), the fiscal deficit target has been set at 3.5% of GDP, with the Centre planning to borrow 7.80 trln rupees on a gross basis through dated securities, up 700 bln rupees from the quantum borrowed this year.

Das also said there was no plan "at the moment" to monetise the government's deficit.

Under certain conditions, the RBI can "subscribe to the primary issues of Central Government Securities", as per the FRBM Act. With Sitharaman activating the escape clause, speculation was rife whether the RBI could buy bonds directly from the government.

(For all the latest News, Mumbai, Entertainment, Cricket, Business and Featured News updates, visit Free Press Journal. Also, follow us on Twitter and Instagram and do like our Facebook page for continuous updates on the go)

Free Press Journal

www.freepressjournal.in