Finance Minister Nirmala Sitharaman on Tuesday said the government was yet to decide how it would use the funds it is going to get from the Reserve Bank of India.
“I can’t talk about how to utilise it now. We will take a call and then let you know,” Sitharaman said replying to a question at press conference in Pune after attending an interaction with traders, entrepreneurs, and industry experts.
Sources in the government said the additional amount was likely to be used to provide a fiscal stimulus to the sagging economy, reduce borrowing or meet the expected shortfall in revenue collections. Sitharaman on Friday announced a slew of measures to provide stimulus to the economy, but did not compromise on the fiscal deficit target. She could announce more measures this week including a package for homebuyers.
Sitharaman also said it was “outlandish” to question the credibility of the RBI, which on Monday decided to transfer Rs 1.76 trillion to the government. She said the Jalan panel was appointed by the RBI itself, with eminent experts and met several times before arriving at its conclusion. “Any suggestions about the credibility of the RBI, therefore, seems a bit outlandish to me,” she said.
The panel went into the issue of excess RBI capital and considered all important aspects, including financial stability and contingency requirements, before coming at its formula, based on which the capital is being transferred, she said.
The RBI’s excess reserves had become a thorny issue between the central bank and the government last year.
Former governor Urjit Patel and his deputy Viral Acharya, who quit separately before their terms ended, were opposed to part with the reserves and had also found support from Patel’s predecessor, Raghuram Rajan. Within weeks of taking over, present Governor Shaktikanta Das, who had retired as the finance secretary, appointed the Jalan panel in consultation with the government in December 2018.
The Opposition, however, is not happy with the proposed fund transfer and has accused the government of raiding the RBI to manage a slowing economy.
Congress leader Rahul Gandhi said Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman are “clueless” about solving the “self-created economic disaster” and accused them of “stealing money” from the RBI. “Stealing from the RBI won’t work — it’s like stealing a Band-Aid from the dispensary and sticking it on a gunshot wound,” he said, using the hashtag “RBILooted”.
Rebutting the allegations Sitharaman said the Congress leader should have had consulted his own past finance ministers before levelling such charges.
“The Congress should have consulted its own finance ministers and senior leaders before making these allegations regarding the RBI. They have become an expert in making such allegations of stealing and I do not want to pay much heed to this,” she told reporters.