Ahead of the presentation of Union Budget in February, Finance Minister Arun Jaitley on Friday said the government will stick to the 3.3 per cent fiscal deficit target in the current financial year, even as he highlighted the need to improve credit flow and liquidity in the markets. Jaitley said flagging issues of credit and liquidity does not infringe on the Reserve Bank’s autonomy and hoped these issues will get resolved.
“Of course, the government respects the autonomy of the central bank and because we respect the autonomy of the central bank that is why we told them … these are the problems that the market is facing,” he said at the annual general meeting of industry body FICCI. He said the problems were pointed to the RBI as they lied within its power and jurisdiction.
“I can’t conceive how an elected sovereign government bringing to the notice and flagging the issue of credit and liquidity can in anyway infringe the autonomy,” he said adding if there is a scarcity of capital in the market it has to be told to the concerned authority.
Jaitley said since the economy needs to be protected from global challenges like high oil prices, the government will stick to fiscal deficit targets to avoid the problem of twin deficits.
IBC resolutions to help written-off bad loan recovery
Having witnessed a significant pile up of non-performing assets accounts in their books, the public sector banks have been focussing on recovery of bad loans including from the written-off accounts. While the pace of recovery from written-off accounts remains slow with PSBs recovering a sum of Rs 32,693 crore over the last four years, with resolution under Insolvency and Bankruptcy Code gathering pace, there is expectation that recovery from written-off bad loans may see an increase.
“Even in this year, despite all the odds, we will be able to maintain our fiscal targets because when current account deficits are impacted by oil prices and strengthening dollar, the last thing that India can afford is to run itself into a twin deficit situation because a fallout of that is very serious,” he said.
As per latest data, fiscal deficit in April-October period stood at 103.9 per cent of budget estimates.
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