India’s foreign exchange reserves surged by USD 3.883 billion to touch a lifetime high of USD 541.431 billion, RBI data showed. on Friday. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves. The country’s reserve position with the IMF rose by USD 22 million to USD 4.657 billion during the reporting week, the data showed.
Meanwhile the economic advisory panel of the 15th finance commission has suggested providing a range rather than a number as fiscal deficit targets for both the Centre and states in a report, the commission’s chairman N K Singh said.
“Looking at the uncertainties, I felt that, there was merit at looking at a range than a number… Having a range will be in congruity with what you have in monetary policy with +/- 2 per cent (inflation target) and that we could, no doubt, while giving fiscal number say that the central number is this, and it will be more realistic,” Singh told the media.
Singh, however, said that providing a range of fiscal deficit would require amendments in the Fiscal Responsibility and Budget Management (FRBM) Act. “It (providing a range) would mean revisiting the FRBM law which provides for giving a fixed point of fiscal deficit,” Singh said.
In the 2020-21 Budget, the government had used the escape clause of 0.5 per cent relaxation provided in the FRBM Act for the last year as well as the current financial year, changing the targets for fiscal deficit to 3.8 per cent and 3.5 per cent of GDP, respectively.
However, with the Centre borrowing a record Rs 12 lakh crore from the market this fiscal, and states’ borrowing ceiling increased to 5 per cent of their GDP from 3 per cent, the general government deficit is expected to be higher than what was projected in Budget before the pandemic.
Under the monetary policy framework, the RBI has been mandated to contain inflation at 4 per cent, with a band of +/-2 per cent. The Commission is scheduled to submit its final report on October 30, covering fiscal years 2021-22 to 2025-26.