Finance Minister Nirmala Sitharaman is scheduled to address the post-Budget meeting of the Reserve Bank of India’s (RBI) central board on Tuesday. The key highlight of this meeting will be the Union Budget 2021-22, including the fiscal consolidation roadmap.
On Saturday, FM Sitharaman has said the Union Budget 2021-122 has set the pace for India to become Aatmanirbhar. Replying to the debate on the Budget in Lok Sabha, the minister also said the challenges of pandemic did not deter the government from undertaking reforms for maintaining the long-term goals of the country.
For the next 2021-22 fiscal, the deficit has been pegged at 6.8 percent of GDP, which will be further lowered to 4.5 percent by the fiscal ending March 31, 2026. The meeting will be held virtually for the first time due to COVID-19 protocol, sources said.
Earlier this month, Reserve Bank of India (RBI) Governor Shaktikanta Das said the central bank will able to manage the high quantum of government borrowings at Rs 12 lakh crore for the next fiscal in a “non-disruptive” manner. The governor had said the extraordinary event of the pandemic has resulted in deviation from the fiscal consolidation roadmap but declined to comment on what view the rating agencies will be taking on the high fiscal gap at 9.5 per cent in FY21 and 6.8 per cent in FY22.
Das had said the RBI, being the debt manager for the government, did discuss the borrowing with the Ministry of Finance even before the Budget. The government was earlier committed to getting the fiscal deficit down to 3 per cent in the medium term as per the Fiscal Responsibility and Budget Management (FRBM) Act mandate and now plans to touch 4.5 per cent by FY26.
The finance minister would also apprise the board of various other announcements made in the Budget to revive growth by spending more on infrastructure and attending to the needs of the healthcare sector. The Indian economy is expected to contract by 7.7 per cent in the current fiscal ending March, hit by the COVID-19 crisis.