Union Finance Minister Arun Jaitley said that the central government does not require extra funds from the Reserve Bank of India or any other institution to meet its fiscal deficit target. In an interview with Times Now on Friday, he said that while the government may not agree with the central bank, both need to come to a consensus in the larger public interest.
“We don’t need any extra funds from any other institution to finance our fiscal deficit. Let’s be very clear that’s not the intention of the government,” he said. “And we are not saying that in next six months give me some money.”
Jaitley was referring to reports from November 6 suggesting that the government sought Rs 3.6 lakh crore capital from the RBI. Economic Affairs Secretary Subhash Chandra Garg had dismissed the report, calling it “misinformed speculation”. “There is no proposal to ask RBI to transfer Rs 3.6 or 1 lakh crore, as speculated,” he had said.
India’s fiscal deficit is slated to come down to 3.3% of its Gross Domestic Product at the end of the current financial year. “All we are saying is there has to be some discussion and some norms under which Reserve Bank will have a capital framework,” said Jaitley, adding that the framework determines the amount of funds maintained as reserves. These surplus funds could be used for poverty alleviation programmes, he added.
At a meeting of its board of directors on November 19, the RBI had decided that an expert panel set up jointly by the government and the central bank will examine the economic capital framework to decide on matters related to its surplus reserves. The meeting was held amid a tussle between the government and the RBI, with speculation that the Centre has proposed a change in rules that will enable it to supervise the central bank better.
Jaitley said that it is not necessary for the government and the RBI to agree with each other. “At the end of the day, the underlying consideration is larger public interest and overall interest of the economy,” he said. “You come to a consensus finding and even if you can’t come to the consensus you can live with different opinions.”
Jaitley also denied claims that the government was at war with institutions like the RBI, Central Bureau of Investigation, the Supreme Court and Central Information Commission. “These charges are made by those who criticise the government morning and evening, seven days a week,” he said.
Several Opposition leaders, including former Prime Minister Manmohan Singh and Congress President Rahul Gandhi, have accused the government of interfering in the working of the national institutions. The protests gained momentum in the wake of the Centre’s decision last month to send the CBI’s top two officials – Director Alok Verma and Special Director Rakesh Asthana – on leave, pending an inquiry into corruption allegations.
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