There is no proposal from the government to ask Reserve Bank of India to transfer its surplus reserves, said Subhash Chandra Garg, economic affairs secretary in the finance ministry, on Friday amid Opposition charge that the Centre had demanded Rs 1 lakh crore from the bank.
“Lot of misinformed speculation is going around in media. Government’s fiscal math is completely on track. There is no proposal to ask RBI to transfer 3.6 lakh crore or 1 lakh crore, as speculated,” he tweeted.
Garg added 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.
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”.
“The government stares at a fiscal deficit crisis… The government wants to step up the expenditure in an election year. Finding all avenues closed, in desperation, the government has demanded Rs 1 lakh crore from the reserves of RBI,” the former finance minister said at a press conference in Kolkata on Thursday.
Dismissing talk of fiscal deficit crisis, Garg said, “Government’s FD 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%. Government has actually foregone 70000 crore of budgeted market borrowing this year,” he tweeted.
The government and the RBI have been clashing on several issues including the reserves question, and a government proposal to ease the capital and lending curbs for state-run banks. The rift has widened sharply in the past few weeks and will be taken up at the RBI’s forthcoming board meeting on November 19.
(With Reuters inputs)
First Published: Nov 09, 2018 14:30 IST