The finance minister said the decision to set up the committee was taken when Urjit Patel was the governor of the RBI.
New Delhi: Amid bitter stand-off between the RBI and the Centre which led to the exit of governor Urjit Patel earlier this year, the government on Monday asserted that it does not need the Central bank’s surplus to finance its fiscal deficit target.
Finance minister Arun Jaitley stressed in Lok Sabha that the NDA dispensation has the best track record of managing the deficit than any other previous regime.
Replying to a debate on the second batch of supplementary demands for grants, Mr Jaitley said the RBI surplus could be used to alleviate poverty and recapitalise public sector banks.
The House later passed the supplementary demand for grants for the current fiscal to permit gross additional expenditure of Rs 85,948.86 crore, amid sloganeering by Congress and AIADMK members on Rafale and Cauvery issues.
While Rs 41,000 crore would go in for capital infusion into public sector banks, Rs 2,345 crore would be infused into debt laden national carrier Air India.
“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... It is a priority of the government to maintain fiscal discipline, Mr Jaitley said.
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 bank maintain 14 per cent reserves.
The RBI was maintaining a reserve of 28 per cent, he said, adding the expert committee will 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.
The Reserve Bank has a massive Rs 9.59 lakh crore worth reserves and former RBI governor led Bimal Jalan headed six member committee has been set up to decide on the optimum capital reserves that the central bank should hold.
The finance minister said the decision to set up the committee was taken when Urjit Patel was the governor of the RBI. With regard to concerns over the agrarian situation, Mr Jaitley said the government will take all steps to support the farmers.