Noting that finance ministers all over the world are perennially in search of revenue to balance government budgets, acting Finance Minister Piyush Goyal on Sunday favoured printing currency as a way of deficit financing, citing the example of the US.
Goyal’s remarks follow his presentation of the interim Budget 2019-20 earlier this month, which contained major largesse for the stressed agriculture sector as well as tax sops for the middle class with implications for the fiscal deficit.
The fiscal deficit estimate for the current year has been revised upwards to 3.4 per cent of the gross domestic product (GDP).
“As finance ministers we are always in need of money,” Goyal said addressing the foundation day anniversary event of the state-run Security Printing and Minting Corporation of India (SPMCIL), and recalled that the Fiscal Responsibility and Budget Management Act (FRBM), 2003, had been enacted during the Atal Bihari Vajpayee-led NDA government.
The FRBM Act aims to institutionalise financial discipline, reduce India’s fiscal deficit, improve macroeconomic management and the overall management of the public funds through a balanced budget.
“I have heard that the US does deficit financing only by printing currency,” Goyal said.
He told the gathering in jest that as Finance Minister he would have been happier if he had known of SPMCIL’s recent creditable performance on both the production and profit fronts.
SPMCIL, which supplies bank notes, coins and security documents to the central government and the states, posted a net profit of Rs 630 crore last year, of which Rs 200 crore has been handed over to the government as dividend.
According to senior officials, the company is on course to print 10,000 million pieces by the end of the current fiscal ending March.