RBI chief asks centre to drastically cut borrowings

In his address at the biennial Vibrant Gujarat Global Investors Summit in Gandhinagar, Patel said the country’s cumulative fiscal deficit of the states and the centre was among the highest in G20 countries.

Reserve Bank of India governor Urjit Patel on Wednesday warned that the government’s debt to GDP ratio was constraining the country’s sovereign ratings and called upon the central government to work towards reducing high central and state borrowings.

The Reserve Bank of India (RBI) Governor Urjit Patel smiles while attending a seminar during the Vibrant Gujarat investor summit in Gandhinagar on January 11, 2017. (REUTERS)

In his address at the biennial Vibrant Gujarat Global Investors Summit in Gandhinagar, Patel said the country’s cumulative fiscal deficit of the states and the centre was among the highest in G20 countries, at 6.4% of the GDP for financial year 2016-17.

Citing data from the International Monetary Fund (IMF), he said: “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.”

The RBI chief said that low and stable inflation was indeed important but at the same time, India must ensure its medium-term consumer-prices based inflation target of four per cent is “secured on a durable basis.”