Market borrowings: the Union government has pegged its market borrowings to be Rs 4.48 lakh crore in this fiscal.
Fiscal Deficit: The Union government has exhausted two-third of its market borrowing estimates in the first four months of this fiscal. According to the latest official data, the Modi government has borrowed Rs 2.96 lakh crore during April-July period, which is 66% of its annual estimate. In her maiden budget presented in July this year, finance minister Nirmala Sitharaman had pegged the Union government’s market borrowings to be at Rs 4.48 lakh crore in FY2019-20. However, a slowing economy and weak revenue collection have caused concerns among the policy circles about the government’s ability to stick to the fiscal deficit target for the year despite receiving a record Rs 1.76 lakh crore surplus transfer from the Reserve Bank of India.
Finance minister Nirmala Sitharaman had estimated the government’s gross borrowing this year to be at Rs 7.03 lakh crore, of which two-third or Rs 4.48 lakh crore was to come from market borrowings. The government has already borrowed Rs 5.47 lakh crore in the first four months of this fiscal, which is 78% of its annual borrowing estimate, and Rs 2.96 lakh crore of this amount has come from market loans.
Usually, the government borrows heavily in the first half of a financial year to frontload the expenditure on developmental schemes. In fact, the Union government had exhausted 87% of its total borrowing requirement in the first four months of the last fiscal.
However, this year’s borrowing pattern is distinct from the government’s borrowing pattern last year. Though it had exhausted 87% of its overall borrowing limit in the first four months of the last fiscal, but its market borrowings were at 56% of its annual estimate for the year.
This year, the government has exhausted 78% of its gross borrowing limit in the first four months (April-July) that is 9% less in comparison with the previous year. But it has exhausted 66% limit of its market borrowing, which is 10% more in comparison with the previous year.
According to the latest official data, the Union government’s market borrowings account for the biggest chunk of its domestic financing so far. It has raised Rs 2.96 lakh crore from market which is almost 55% of its total domestic borrowings so far.
Market borrowings are followed by savings deposits and certificates (Rs 59,856 crore), securities against small savings (Rs 48,889 crore), the national small saving fund (Rs 34,468 crore) and loans from public provident funds (Rs 12,053 crore), among others.