Government Does Not Need RBI Reserves To Manage Fiscal Deficit: Arun Jaitley

Finance Minister Arun Jaitley on Monday said the government was not seeking Reserve Bank of India reserves to meet the fiscal deficit target but to utilise it for accelerating poverty alleviation programmes and recapitalising the state-owned banks. Replying to a debate on the second batch of supplementary demands for grants in the Lok Sabha, the minister said that the Narendra Modi government has the best track record of keeping fiscal deficit under check.

The house later passed supplementary demand for grants for the current fiscal year to provide additional expenditure of Rs 85,948.86 crore, about half of which is for capital infusion in public sector banks.

Referring to the issues concerning the Economic Capital Framework (ECF) of RBI, Mr Jaitley said that central banks of most of the countries keep a reserve of 8 per cent, while some conservative central banks maintain reserves of 14 per cent.

The RBI was maintaining a reserve of 28 per cent, he said, adding that the expert committee would decide on the appropriate reserve of the central bank so that 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 fiscal deficit. We do not need RBI reserves to manage the fiscal deficit," Mr Jaitley said.

He said the government has brought down fiscal deficit, and kept inflation and the current account deficit under check, while the country retained the fastest-growing economy tag for five years.

The finance minister also said that it was only during the tenure of the Modi government that the country became the fastest growing major economy in the world, ahead of China.

Mr Jaitley also said that demonetisation and the Goods and Services Tax (GST) has 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. When the NDA government completes its five-year term in 2019, the number would double from 3.83 crore, he added.

With regard to concerns expressed by some members over the agrarian situation, Mr Jaitley said the government would take all steps to support the farmers.

"Whatever steps need to be taken at the end, the government will take it," he said, amid sloganeering by the Congress party over the Rafale issue.