Union Finance Minister Pranab Mukherjee sought to dispel fears about the high fiscal deficit projected in the Budget for 2009-10, on Sunday, saying that the RBI would be able to manage government borrowing programmes effectively.
Speaking at a State Bank of India (SBI) function here, Mukherjee said that he had a meeting with the RBI board of governors on Saturday.
“I hope the RBI would be able to manage debt effectively as it had done in the last fiscal,” he said.
In 2008-09, government borrowing was pegged at Rs one lakh crore. But because of the slowdown, total government borrowing had risen to Rs three lakh crore, Mukherjee said.
In such a situation, the RBI had been able to manage debt effectively, the minister pointed out.
To a query, he said that there would be no crowding-out effect of private investment and interest rates would also not rise.
The minister inaugurated 154 branches and 2,151 ATMs of SBI in the country on Sunday.