Fiscal deficit target: Narendra Modi sticks to market borrowing target

By: |
New Delhi | Published: September 30, 2016 6:41:58 AM

Sending out strong signals that it will stick to fiscal deficit target, the Centre on Thursday announced that it will borrow not more than estimated R2.45 lakh crore from the local bond market in the last six months of the current fiscal year to...

The bonds sale in October-March will account for about 41% of the government’s planned gross borrowing of R6 lakh crore for the year. (Reuters)The bonds sale in October-March will account for about 41% of the government’s planned gross borrowing of R6 lakh crore for the year. (Reuters)

Sending out strong signals that it will stick to fiscal deficit target, the Centre on Thursday announced that it will borrow not more than estimated R2.45 lakh crore from the local bond market in the last six months of the current fiscal year to March 31.

The bonds sale in October-March will account for about 41% of the government’s planned gross borrowing of R6 lakh crore for the year. The net borrowings will be R1.77 lakh crore during H2FY17, economic affairs secretary Shaktikanta Das said.

The Centre’s full fiscal-year market borrowing, net of redemptions, would be R4.25 lakh crore. The government is borrowing to fund current fiscal’s targeted budget deficit of 3.5%, lower than last year’s 3.9% aim. “The government stands committed to the fiscal deficit target as announced in the Budget,” Das said.

A government-appointed panel is reviewing the Fiscal Responsibility and Budget Management Act to assess the possibility of adopting a range for the fiscal deficit target, instead of a specific aim. The FRBM mandates New Delhi to narrow the budget gap to 3% of GDP by March 31, 2018.

fiscal graph

The government, through the Reserve Bank of India, will sell bonds of up to R14,000 crore-R15,000 crore in weekly auctions through October-February, Das said. The government debt sales for this fiscal year will end in the week ending February 10. It will also borrow R188 crore through Treasury Bills during October-December, another finance ministry official said. The government may also revise upwards its current fiscal bond buy back/switch target of R75,000 crore, he added.

Do you know What is Centrally Sponsored Scheme, Non Tax Revenue, Non Debt Capital Receipts, Consolidated Fund of India, Disinvestment? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1Exim Bank to provide USD 87 million credit line to Zimbabwe
2US, India support multi-stakeholder model of net governance
3InvITs may help unlock USD 5-7 bn from assets in roads, power