NEW DELHI: The finance ministry has ruled out any fresh borrowing for the stimulus package announced on Manday, claiming that it will have no impact on India’s fiscal roadmap this year. “There will be no deviation from the borrowing target announced by the ministry. The stimulus package is well within the anticipated expenditure and was already accounted for in the budget,” a senior official told this publication.
The official explained that even though no one anticipated the severity of the second wave, there was a contingency fund earmarked for this purpose in the budget. “This year’s budget was very meticulously planned. While we were conservative in our estimate regarding the revenue targets, sudden expenditure on account of the second wave was not unforseen. Experts are talking about a third wave. But we are better prepared and, in the present context, this will not impact our fiscal path, as predicted by many agencies,” the official pointed out.
The government had estimated a fiscal deficit of 6.8 per cent for the year and kept its gross market borrowing at Rs 12.05 lakh crore. However, given the second wave, many agencies including Nomura and Barclays see the gap widening to more than 7% of GDP for the current financial year. Even Care Ratings has forecast a wider fiscal deficit at 7.8%.
Finance minister Nirmala Sitharaman had, on Monday, announced several measures, including Rs 1.5 lakh-crore of additional credit for small businesses, more funds for the healthcare sector, loans to tourism agencies and guides, and a waiver of visa fees, as part of a stimulus package for sectors hit hard by Covid-19. While the government claimed that the package, which mostly included government guarantees, total up to Rs 6.29 lakh crore together with previous packages, economists claim that its fiscal impact will be limited.
Rs 12.05L cr borrowing target for FY22
6.8% Fiscal deficit target for FY22