Centre was sensitive to fiscal deficit: Garg on CAG's bank recap concerns

Funds for these investments were raised by the government through the issue of non-transferable special securities to the same PSBs.

Subhash Garg, the Department of Economic Affairs (DEA) secretary during the years when the Comptroller and Auditor General (CAG) of India had flagged the issue of the finance ministry not showing bank recapitalisation as fiscally non-neutral, said the government at that time was sensitive to fiscal deficit.

The government can now show recapitalisation as affecting deficit. The government is no longer sensitive to fiscal deficit as it was raised to 9.5 per cent of gross domestic product (GDP) in the Revised Estimates (RE), from 3.5 per cent in the Budget Estimates (BE) for the current fiscal year, Garg told Business Standard.

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