RBI Governor says no reason to doubt govt will meet fiscal deficit targets

Throwing his weight behind Finance Minister Nirmala Sitharaman's budget numbers, Reserve Bank Governor Shaktikanta Das has said that there is no reason to doubt that the government will be able to cut fiscal deficit to 3.5 per cent of the GDP in the fiscal beginning April 1.

In an interview with PTI, Das said the government has remained within the limits set by the Fiscal Responsibility and Budget Management (FRBM) Committee for the budget deficit.

The government missed deficit target for the third year in a row, pushing shortfall to 3.8 per cent of the GDP in the current fiscal as compared to 3.3 per cent previously planned. The fiscal deficit target for the coming fiscal year starting April 1, has been fixed at 3.5 per cent.

The fiscal deficit is the shortfall in a government's income compared with its spending. It essentially means that the government is spending beyond its means.

"With regard to the fiscal management of the government, the government has remained within the recommendations FRBM committee," Das said. "So, therefore, the excess fiscal deficit has been restricted to 0.5 per cent. The government has adhered to that and a large part of the financing of fiscal deficit next year will come from small savings."
"Besides, an announcement has been made in Budget for raising limits for corporate bonds from 9 per cent to 15 per cent," he said. "So, therefore, there are a lot of foreign resources which are going to come into India. Indian corporates are also accessing a lot of money from foreign sources today through ECB."