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Crisis? Print currency notes, says CII
March 31, 2009 17:27 IST
The Confederation of Indian Industries asked the government on Tuesday to print more currency notes to bridge fiscal deficit and keep the economy afloat, which is reeling under the impact of global financial meltdown.
"If the government is going to borrow from the market to fill the fiscal deficit, then they are going to suck up all the money available in the banks and we will be crowded out," the new CII president Venu Srinivasan told reporters in New Delhi.
Pitching for monetisation of the budget deficit, he said, "It means printing notes. Which means you have the risk of increasing inflation but at the same time you will keep the economy afloat".
He further said that government should also amend the Fiscal Responsibility and Budget Management Act, which imposes restrictions on public expenditure.
Raising concerns over the government's decision to raise an additional Rs 300,000 crore (Rs 3,000 billion) during 2009-10 to fund public expenditure, CII chief said very little money would be left for the private sector.
Adding off-budget items and state deficits, total government deficit is likely to be in excess of 10 per cent of the GDP, he said, adding revenue deficit accounts for over 70 per cent of the fiscal deficit.