Finance Minister Nirmala Sitharaman Responds About Deficit FinancingJuly 27, 2021 14:42
(Image source from: msn.com)
Union Finance Minister Nirmala Sitharaman said that the government has no plans for direct monetization and there are no plans to print extra money in this deficit financing despite of coronavirus pandemic. Nirmala Sitharaman responded for a question in Lok Sabha if the government has plans to print the currency to stand against the crisis. This clearly reflects about the convergence between the Reserve Bank of India (RBI) and the government of India. During his recent media interaction, Shaktikanta Das, the Governor of RBI stressed about the direct deficit monetization and he called it as a conflict with the FRBM Law. Some of the analysts made statements about the option so that the government can build adequate resources to soften the covid blow. Some of them even opposed the move as well.
The Centre's fiscal deficit reached 9.3 percent of the GDP and the government had to roll out relief packages during these tough times despite the revenue drop. The deficit is 6.8 percent for the financial year 2022. Nirmala Sitharaman said that the government has been supporting the Atmanirbhar Bharat Mission that kept the economy firmly on the path of recovery. She said that the total relief steps that are taken in the financial year 2021 are Rs 29.87 lakh crores which also included Rs 12.71 lakh crores that were initiated by the Reserve Bank of India. Nirmala Sitharaman also announced the budget for the financial year 2022 which had a 34.5 percent increase in capital expenditure and a 137 percent jump in the healthcare expenditure in India.
The Indian government also announced Rs 6.29 lakh crore package to tackle the second wave of coronavirus and prepare the health infrastructure for the future. Nirmala Sitharaman stressed that the government is focused on the mix of supplies and the demands to support long-lasting growth.
By Siva Kumar