New Delhi, January 11: RBI Governor Urjit Patel on Wednesday urged Indian government to suppress central as well as state borrowing as government debt to GDP ratio is very high.
This could be an alarm bell for Modi government which is perceived to be gearing up for populist Union budget ahead of polls in 5 states.
Speaking at the Vibrant Gujarat summit Reserve Bank of India governor highlighted that government debt to gross domestic product ration is constraining the country’s sovereign ratings.
Citing International Monetary Fund data, Patel pointed out that India’s total fiscal deficit which is targeted at 6.4 percent of GDP in 2016/17 when combined with the levels of the central and state governments, is among the highest in G20 countries.
“We have to take cognisance of these comparisons and facts as we go forward to make progress. Specifically this will help us to better manage risks for ourselves and thereby mitigate financial volatility,” Patel said.
Patel further added that India needs to ensure that its medium-term consumer-price based inflation target of 4 percent is secured on a durable basis. He also said RBI would continue to go ahead with “fluid transmission” of monetary policy. Recently banks have announced steep cuts in their lending rates.
He said, “We have to ensure that our banks continue to conform to international capital standards as a member of G20 & BCBS.”
We have to ensure that our banks continue to conform to international capital standards as a member of G20 & BCBS: RBI Guv Urjit Patel pic.twitter.com/httaZbjWF9
— ANI (@ANI) January 11, 2017