The government said Wednesday that it will stick to the ₹The $ 12 trillion borrowing plan it had laid out in May, a move that will help calm bond market investors who feared a further increase in the supply of government bonds to fund a second round of fiscal stimulus.
“We have decided to continue with the same figure of ₹12 trillion for the full year, which means our loans for the second half would be ₹4.34 trillion, or 36.16% of the ₹12 trillion to be loaned throughout the year, “Economic Affairs Secretary Tarun Bajaj told reporters.
The devastating impact of the coronavirus pandemic and the strict national lockdown had prompted the Union Ministry of Finance to expand the original loan scheme by approximately 54% to ₹12 trillion in May as it needed to spend more on humanitarian and economic aid amid a sharp drop in revenue collection.
Bond traders feared lending for the October-March period would rise to ₹6 trillion, according to a Bloomberg survey.
Economists said the unchanged lending schedule may become a case of postponing the inevitable, given the considerable fiscal stress that is mounting amid tepid tax collections and a steady rise in coronavirus infections.
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“The government may prefer to exercise greenshoe options as has been done in several recent auctions. However, expectations of increased fiscal support to shore up the tough recovery should be tempered, “said Aditi Nayar, chief economist at rating agency ICRA Ltd.
In response to a question on whether the government has taken into account the need for a second stimulus package, Bajaj said the current fiscal year needs have been included in the debt target.
“I don’t think we have to increase it right away. In this year, from some areas, we have mobilized additional income. I trust that we will be able to manage with him ₹12 billion plan, “Bajaj said.
Maintaining the debt plan can be a step to avoid displacement of companies from the debt market during a recovery.
Bajaj said that the decision to maintain the level of indebtedness was made in view of the improvement in revenue collection, in line with the opening of the economy from June onwards, and the re-prioritization of spending to focus areas. , cutting avoidable spending in other areas.
In the April-August period, the Center’s fiscal deficit climbed ₹8.7 trillion, or 109.3% of the target for the full year, as tax collection remained under pressure, data released by the Comptroller General of Accounts, or CGA, showed on Wednesday.
The fiscal deficit was ₹7.96 trillion, or 78.7% of the estimate budgeted in the prior year period.
Income from income was at ₹3.71 trillion, or 18% of the budgeted goal during April-August, while total spending was ₹12.48 trillion, or 41% of the budgeted estimate.
The Finance Ministry expects a recovery in the third and fourth quarters after the 23.9% contraction of gross domestic product, or GDP, in the April-June period.
In the August monthly economic review, the Finance Ministry said India was witnessing a ‘strong V-shaped recovery’ but noted that it was critical to reorient policies towards rebuilding the economy, paying attention to agricultural supply chains. . factor markets, infrastructure, start-ups, financial inclusion, training and healthcare.
India’s eight key infrastructure industries, accounting for two-fifths of industrial production, continued to contract in August at 8.5%, compared with a revised 8% contraction in July, official data showed.
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