(LiveMint)
Finance minister Arun Jaitley expressed confidence that the government would meet its fiscal deficit target for the year to 31 March without dipping into the central bank’s reserves, which he said could be used for recapitalizing state-run banks or for public welfare.
“It (part of the Reserve Bank of India’s reserves) could be used for recapitalizing the public sector banks, it could be used for the poor of the country. The government does not use it for its own salaries. My government has the best fiscal record. Even this year, we will maintain the fiscal deficit and I don’t need that kind of money for maintaining fiscal deficit,” Jaitley said at an event organized by Aaj Tak news channel. For the current year, the government has set a fiscal deficit target of 3.3% of gross domestic product (GDP).
Former chief economic adviser Arvind Subramanian has argued in his latest book that the centre and RBI should strike a “grand bargain” under which the government should allow reforms of public sector banks, including majority private-sector participation in them, while RBI should deploy its surplus capital to help recapitalize state-run banks.
