Takehiko Nakao, president of Asian Development Bank (ADB), on Thursday said the government should use the Rs 1.76-trillion payout from the Reserve Bank of India (RBI) for stimulating the economy, but without compromising on the fiscal deficit target of 3.3 per cent of gross domestic product.
The visiting ADB president supported the RBI’s approval to the fund transfer and said the country should come up with more such ideas to support growth.
“Ideas like transferring of the RBI's surplus capital to India (the government) would help (the growth process),” he said at a press conference. Nakao met Finance Minister Nirmala Sitharaman and Transport Minister Nitin Gadkari on Thursday; he had met Railways and Commerce Minister Piyush Goyal on Wednesday.
He said around $25 billion, transferred by the RBI to the government, should come handy to propel the economy, but this is a “one-time” step. “It's an appropriate policy, but we cannot continue to do this," he cautioned.
Asked whether the move would help the economy recover, he said he thinks so "because instead of just keeping the capital from the RBI, it can be used for the government expenditure”. Sitharaman recently said the government is yet to decide on how to use the RBI's money transfer to the government.
The multi-lateral agency would lend $3 billion to the government, including for government-backed guarantees, in 2019. This would be equal to the amount given in 2018.
It would give loans worth $1 billion to the non-government sector in 2019; in 2018, the amount was $500 million. The Manila-based institution would also provide $500 million to the Jal Jeevan Mission, he said. The money will be used for census towns, he said.