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DBS Group expects fiscal deficit to remain between 3.5% and 3.6% for FY20

Updated : October 01, 2019 11:29 AM IST

India's fiscal deficit is likely to remain between 3.5 percent and 3.6 percent for the financial year 2020, said Taimur Baig, managing director and chief economist at DBS Group Research.

“The borrowing calendar or the overall central government deficit — it is hard for me to see it breaching more than 30-40 basis points (bps) above the annual target, so 3.5-3.6 percent,” Baig said in an interview with CNBC-TV18.

On expectations over the upcoming RBI policy, Baig said, “It is fairly non-controversial to see RBI as fairly dovish and considering the circumstances, I think we are fairly dovish as well. We will expect further accommodation. There are many elements to RBI’s stance at this point, not just the interest rates but their automatic adjustment that is taking place that is helpful. The liquidity management framework in our view would be towards keeping liquidity ample in the system."

“Given the headwinds the banking system and the non-banking financial companies (NBFCs) system are facing, this is not the time to worry too much about overheating and the inflation and so on. RBI is certainly a key player in that area,” added Baig.
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