HYDERABAD: The government on Tuesday stuck to the script to not revise its FY21 gross borrowings
upwards notwithstanding the recent Rs1.7 lakh crore Covid-19 stimulus package and the likely need for further fiscal measures. In line with tradition, the Ministry of Finance decided to frontload its borrowings by raising Rs 4.88 lakh crore or 62.5 per cent of the FY21 gross borrowings in the first six months of the fiscal.
This includes raising Rs 25,000 crore every week via T-Bils from April through September. For now, the Ministry has ruled out the possibility of the RBI buying bonds directly as the government believes there’s substantial demand for securities in the market.
“Government has sufficient amounts to meet its cash requirements. We have sufficient capacity for a stimulus or any other requirement arising due to Covid-19,” said Atanu Chakraborty, Secretary, Department of Economic Affairs.
He added that the Ministry will do all it can to meet the ‘health commitments for resurgence and recovery of industry, for the poor and vulnerable sections. “Our fund raising resources are geared towards that end,” he said adding the government has taken into account the higher spending due to the coronavirus pandemic.
Finance Minister Sitharaman pegged FY21 gross borrowings at Rs7.8 lakh crore, including repayments and past loans of Rs2.35 lakh crore.
It means, FY21 net borrowings will be at Rs5.36 lakh crore, up fom Rs4.99 lakh crore. As part of the fund raising plan, the Ministry proposed to roll out G-sec issuances through debt ETFs besides inceasing the ways and means advances, a mechanism using which temporary mismatches in cash flows are managed, limit to Rs1.2 lakh crore.
Meanwhile, Chakraborty said the government’s fiscal deficit aim was ‘very realistic’ and that meeting the FY20 fiscal deficit was not in question.ICRA estimates that the Centre’s capital expenditure and net lending would need to rise by 29.5 per cent on a year-on-year basis in March 2020 to meet the revised estimate of Rs23.5 lakh crore for FY20. Accordingly, further saving in expenditure relative to FY20 revised estimate appears likely.