Narendra Modi government today strongly denied accusations that the root cause for the rift between the government and Reserve Bank of India (RBI) was government asking to transfer its surplus reserves to the extent of Rs 3.5 lakh crore.
Economic Affairs Secretary Subhash Chandra Garg made it clear that there is no such proposal from the government at all. It may be recalled that Congress chief Rahul Gandhi has been making this accusation repeatedly. He deplored that lot of misinformed speculation is going around in media. He asserted that the Government’s fiscal math is completely on track and there is no proposal to ask RBI to transfer 3.6 lakh crore or 1 lakh crore, as speculated.
In his Tweets, Garg said that the only proposal concerning the reserves that the government was discussing was to fix the appropriate economic capital framework of the RBI. That framework is used to decide the adequate amount of reserves the central bank should maintain. Incidentally, the tweets come a day after senior Congress leader and former finance minister P Chidambaram accused the Narendra Modi government of trying to “capture” the RBI to tide over its fiscal crisis, warning that any such move would be “catastrophic”.
Exuding confidence about government’s fiscal math, he said, it will stick to the fiscal deficit target of 3.3 per cent for the current financial year ending March 31, 2019. “Government’s FD (fiscal deficit) in FY 2013-14 was 5.1%. From 2014-15 onwards, Government has succeeded in bringing it down substantially. We will end the FY 2018-19 with FD of 3.3%. The government has actually foregone 70,000 crore of budgeted market borrowing this year,” he added.