The government will stick to its borrowing plan of Rs 12 lakh crore for the current fiscal year, Economic Affairs Secretary Tarun Bajaj said on Wednesday, even as the government hopes to miss its revenue targets.
The government will borrow Rs 4.34 crore through bonds in the second half of the year ending March 2021, in 16 weekly tranches of Rs 27,000-28,000 crore ending in the last week of January. He borrowed the rest in the April-September period.
The government will not extend its loan program beyond January as it wants states and private companies to use the period to raise funds from the market, Bajaj said.
He also said that the government does not expect to obtain 2.1 million lakh rupees from the sale of stakes in state companies.
Earlier on Wednesday, the government extended the deadline to submit initial offers by private companies to buy state-owned Bharat Petroleum Corp Ltd for the fourth time, crushing hopes of making the $ 8- $ 10 billion in profit during the current year.
Asia’s third-largest economy contracted by a record 23.9 percent in April-June under the world’s tightest lockdown to curb the spread of the coronavirus that has caused a drop in tax and non-tax revenue.
The government had already exceeded its fiscal deficit target in the first five months of the year with federal net tax revenue dropping around 30 percent to Rs 2.84 lakh crore.
The government does not expect to reach its fiscal deficit target of 3.5% for the year. Mr. Bajaj said the government will set its new targets in February.
However, market participants fear that the government will likely be able to announce the additional borrowing only in the last quarter when they have more clarity about full-year income.
“Given the highly uncertain outlook on the fiscal math … any higher than expected revenue shortfalls will be covered later with an additional issuance,” said Radhika Rao, an economist at DBS Bank.
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