The latest figures for India's fiscal deficit
come at a time when the Centre is said to be seriously considering direct monetisation of the fiscal deficit by RBI having sidestepped the idea for the first half (H1) of 2020-21 (FY21). Business Standard has learnt
that it is being seriously considered for the second half of FY21.
“It is a high possibility,” said a top government official, when asked if the Centre was considering direct deficit monetisation. “In the latter half of the year, we will have a clearer picture of the economic damage the Covid-19 pandemic has unleashed, and may require further resources to provide support to the economy,” the official added.
The final decision may be taken before the borrowing calendar for October 2020-March 2021 is announced in late September.
Earlier, the Chief Economic Advisor to the Government of India, Krishnamurthy Subramanian had told Business Standard
that the Centre’s fiscal deficit in 2020-21, could be 1.7-1.8 percentage points higher than the 3.5 per cent of gross domestic product, which was targeted in the Budget.