In wake of the financial crisis arose due to coronavirus-led nationwide lockdown, the Modi government has modified the gilt issuance calendar for the remaining part of the first half-year. With the latest move, the government will be borrowing Rs 12 lakh cr in the current fiscal, compared to Rs 7.8 lakh cr earlier. The above revision in borrowings and the selling of government-dated securities have been necessitated on account of the COVID pandemic. The note released by the government added that it has taken this decision in consultation with RBI, after reviewing the cash position and requirements of the central government.
The government borrows to fund its spending on public services and benefits. It is kind of a loan taken by the government and falls under capital receipts in the Budget document. As the revenue falls short in financing the government’s spending programme, the government announces an annual borrowing programme in the Budget to meet the expenditure and fiscal deficit targets.
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Meanwhile, efforts to pump liquidity into the system is continuously taking place from the centre, states, and RBI. \ The centre, along with many states, have come up with announcements that will provide cushion to the economy at standstill. While the central government has rolled out a mega economic relief package, the states, one after the other, are rolling out amendments in the labour laws to give relaxations to the businesses and factories to provide thrust to the output and exports, which could garner revenue for all. Prime Minister Narendra Modi has also asked the states to make more efforts to attract foreign companies, looking out for destinations to shift base.