Govt may get RBI to monetise fiscal deficit in second half of FY21

A final decision on the matter will be taken before the borrowing calendar for October 2020-March 2021 is announced in late-September

After sidestepping the idea for the first half (H1) of 2020-21 (FY21), the Centre is now considering direct monetisation of its fiscal deficit by the Reserve Bank of India (RBI) in the second half (H2), Business Standard has learnt.

“It is a high possibility,” said a top government official, when asked if the Centre was considering direct deficit monetisation. “In the latter half of the year, we will have a clearer picture of the economic damage the Covid-19 pandemic has unleashed, and may require further resources to provide support to the economy,” the official added.

A final decision will be