Mumbai: Although the government has not deviated from its fiscal deficit target of 3.3% for 2019-20 (Apr-Mar), it should not worry about breaching the aim, given the current economic situation, according to State Bank of India Chairman Rajnish Kumar.
"The government has not budged on its fiscal deficit targets though there is a demand for it. We feel in the current circumstances, the government should not care as much about the fiscal deficit but again, that is a very debatable point and there are different points of view," Kumar said.
He was speaking at the sidelines of the Credit Conclave organised by Edelweiss Financial.
Kumar said that even though the GDP projection for 2019-20 at 5%, is lower than expected, it is not unusual in the current scenario of global headwinds, where all major economies are facing a slowdown.
On Tuesday, in its first advance estimate, the National Statistical Office said India's GDP growth is likely to fall to an 11-year low of 5.0% in 2019-20 (Apr-Mar).
Kumar added that the developing geopolitical situation in West Asia has also come as a surprise hit, which could lead to upward pressure on prices.
"These are exceptional circumstances with which we have to deal. Overall, the government's financial position has been good...," he said.
According to Kumar, a pick up in bank credit, reduction in risk averseness and a faster pace of resolution remain key for recovery of the financial system.
Saying that the Insolvency and Bankruptcy Code has been a significant reform for the sector, Kumar added that he still does not see bank credit growth coming back to the same peak levels that were being seen previously.
