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Updated on: Wednesday, May 29, 2019, 11:14 PM IST

Govt to borrow less in first half of next fiscal

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Centre to borrow Rs 2.88L cr, float inflation-indexed bonds

New Delhi : The government will borrow Rs 2.88 lakh crore in the April-September period of next fiscal (FY19), which is 47.56 per cent of the budgeted gross borrowing.

In April-September (the first half) of current fiscal, the gross borrowing was Rs 3.72 lakh crore.

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Economic Affairs Secretary Subhash Chandra Garg said the government will come out with inflation-indexed bonds linked to CPI or retail inflation. Also, government securities of 1-4 years duration will be introduced.

He further said that the budgeted gross borrowing through G-Secs for fiscal 2018-19 was Rs 6.05 lakh crore which would be used to fund the fiscal deficit of 3.3 per cent of GDP.

“This represents a substantial reduction compared to last year,” he said. “We are absolutely confident that we will be able to meet all expenditures without going into over draft.”

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The 47.56 per cent of budgeted gross borrowing in the first half of next fiscal is lower than the average of 60-65 per cent in last five years.

Garg said in the next fiscal the G-Sec buyback would be reduced by Rs 25,000 crore. In addition to this, the government will withdraw up to Rs 1 lakh crore from the National Small Savings Fund (NSSF) — Rs 25,000 crore more than in the current financial year — to fund the fiscal deficit.

This could reduce the overall market borrowing programme of the government for the entire fiscal, Garg said.

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“Certainly, this is no indication that we are pushing more towards the second half of the year. If you factor in additional loans, our second half would not be crowded. So there is no shift to the second half. It means that overall borrowings will be lesser,” Garg said.

To a question on whether it would be less by Rs 50,000 crore, he said it should be. The government is also planning to issue more Floating Rate Bonds (FRBs) and introduce CPI-linked bonds. “Both put together would amount to the extent of 10 per cent of issuances during the year,” he said. The government will also introduce two benchmarks during this half year — 2-year and 5-year — to meet the market demand, he added.

Funding plans

 * The budgeted gross borrowing   through G-Secs for fiscal 2018-19 was Rs 6.05 lakh crore which would be used tofund the fiscal deficit of 3.3%   GDP.

*  The government will withdraw up to Rs 1 lakh crore from the National Small Savings Fund — Rs 25,000 crore more                          than in the current fiscal — to fund the   fiscal deficit.

* The 47.56 per cent of budgeted gross borrowing in the first half of next fiscal   is lower than the average of 60-65  per cent in last five years.

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Published on: Tuesday, March 27, 2018, 12:20 AM IST
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