Finance Minister P Chidambaram said the Reserve Bank of India has assured that it will provide ample liquidity to the system so that the current growth momentum in the economy is not hampered.
Chidambaram, after his meeting with the RBI board on Saturday, said, "I have requested the RBI board that there should be ample liquidity and nothing should be done to disturb the growth story."
"I was assured that RBI will provide ample liquidity to all productive sectors," Chidambaram said. Chidambaram also said that RBI had deliberated on the implication of the budget announcement to provide farm credit at 7 per cent from next year.
"RBI board has assured me that they fully support the move," Chidambaram said. He also said that the RBI's analysis for Budget 2006-07 was "by-and-large-favourable."
Chidambaram said the government was committed to fiscal discipline and it will adhere to targets set under the Fiscal Responsibility and Budget Management Act next year.
The Union Budget for 2006-07 has targeted a fiscal deficit of 3.8 per cent of gross domestic product compared to 4.1 per cent estimated in the current financial year.
The FRBM rules require the government to reduce fiscal deficit by 0.3 percentage points annually and revenue deficit by 0.5 percentage points to bring the fiscal deficit to 3 per cent and eliminate revenue deficit by 2008-09.
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