RBI will not fund budget deficit, says Finmin
RBI will not fund budget deficit, says Finmin
New Delhi: The Union government doesn’t plan to get the Reserve Bank of India (RBI) to buy debt at auctions and fund the government’s budget deficit, the finance ministry said in an emailed statement.
RBI’s open-market operations, by which it purchases existing debt from the market, shouldn’t be confused with monetization and such auctions in the secondary market are a regular tool for effective liquidity management, it said.
The government doesn’t plan to invoke a provision in its Fiscal Responsibility and Budget Management Act, which on grounds of national security or calamity, allows RBI to buy government debt at auctions, the ministry said.
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