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Finance Minister Arun Jaitley on Monday reiterated that the government does not need RBI’s surplus to bridge the fiscal deficit. Rather it would prefer the amount to be used for bank recapitalisation or use for a poverty alleviation programme.
Jaitley was replying to a debate on the second batch of supplementary demands for grants in the Lok Sabha, which later approved the additional expenditure. Once the Bill is returned by the Rajya Sabha and gets the Presidential assent, the government would be able to spend ₹85,948.49 crore — this includes ₹70,882.21 crore of the savings of various ministries and departments, which means that the net cash outgo will be ₹15,065.49 crore. This batch also includes ₹41,000 crore for bank recapitalisation.
Referring to the issues concerning the Economic Capital Framework (ECF) of the RBI, Jaitley said that central banks of most of the countries keep a reserve of 8 per cent, while some conservative central banks maintain 14 per cent. The RBI was maintaining a reserve of 28 per cent, he said, adding that the expert committee will decide on the appropriate reserve of the central bank so that the 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 the fiscal deficit. We do not need RBI’s reserves to manage the fiscal deficit,” Jaitley said, adding that the government has brought down the fiscal deficit and kept the inflation and the Current Account Deficit (CAD) under check, while India retained the fastest growing economy tag for five years.
He also said that demonetisation and the Goods and Services Tax have 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, which is likely to rise further.
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.
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