Union Finance Minister Nirmala Sitharaman during a pre-budget photo session on the eve of the presentation of the Budget 2022-23 in Parliament, in New Delhi.
Highlight
- Nirmala Sitharaman will address the post-budget meeting of the Central Board of RBI on Monday.
- The meeting has been scheduled for February 14 where she will address the board members.
- She will talk about the announcements made in the budget to boost the growth rate affected by the 3 waves of COVID-19.
Finance Minister Nirmala Sitharaman is scheduled to address the post-budget meeting of the RBI’s central board on Monday and highlight key points from the Union Budget 2022-23, including the fiscal consolidation roadmap and higher capex plan. It has been a practice that the finance minister addresses the RBI board after the budget, which consists of the RBI governor and the current four deputy governors.
Sources said the meeting has been scheduled for February 14, where she will address the board members and talk about the announcements made in the budget, which have been affected by the three waves of COVID-19.
Budget 2022-23, presented earlier this month, is projected to grow at a nominal gross domestic product (GDP) of 11.1 per cent. The government expects this growth to be fueled by the massive capital expenditure program outlined in the budget with a view to boosting economic activity and crowdfunding private investment by creating demand.
The finance minister raised capital expenditure (capex) by 35.4 per cent to Rs 7.5 lakh crore for the financial year 2022-23, to continue the public investment-led recovery of the pandemic-battered economy. The capital expenditure this year is estimated to be Rs 5.5 lakh crore.
Expenditure on construction of multimodal logistics parks, metro systems, highways and trains is expected to generate demand for the private sector as all projects are to be implemented through contractors.
With regard to borrowing, the government plans to borrow a record Rs 11.6 lakh crore from the market in 2022-23 to meet its expenditure requirement to run the economy. This is about Rs 2 lakh crore more than the current year’s budget estimate of Rs 9.7 lakh crore.
Even the gross borrowings for the next fiscal will be the highest ever at Rs 14,95,000 crore, as against the Budget Estimate (BE) of Rs 12,05,500 crore for 2021-22. The fiscal deficit – the excess of government spending over its revenue – is projected to shrink to 6.4 per cent of GDP next year, as against 6.9 per cent for the current fiscal ended March 31.
In view of the high level of inflation, the Reserve Bank is likely to maintain status quo on the key policy rate in its next bi-monthly monetary policy to be announced on Thursday. However, experts are of the opinion that RBI’s Monetary Policy Committee (MPC) may change the policy stance from ‘accommodative’ to ‘neutral’ and tinker with the reverse-repo rate as part of the liquidity normalization process.
The MPC has been ordered by the government to keep inflation in the range of 2-6 per cent.
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