09-August-2020
Economy News
 
India not close to situation for debt monetisation, says former RBI chief Subbarao
01-Aug-2020

Former RBI Governor D Subbarao on Friday said India is not close to the situation where the central bank has to go for debt monetisation amid rising government spending and falling revenue collection due to the COVID-19 crisis. The case for direct financing is made on the argument that government borrowing this year has ballooned way beyond normal, Subbaro said. Generally, monetisation of debt means the central bank printing currency for the government to take care of any emergency spending and to bridge its fiscal deficit. "There just aren't enough savings in the economy to finance borrowing of such a large size. Bond yields would spike so high that financial stability will be threatened. The RBI must therefore step in and finance the government directly to prevent this from happening," he said.

News Source:- https://economictimes.indiatimes.com/news/economy/finance/india-not-close-to-situation-for-debt-monetisation-says-former-rbi-chief-subbarao/articleshow/77289412.cms