NEW DELHI: The government has cut its borrowing for the current financial year by Rs 10,000 crore to Rs 14.21 lakh crore. The Centre in a statement on Thursday said it will borrow Rs 5.92 lakh crore in the second half of the year. The borrowing during the period would include Rs 16,000 crore raised via maiden sovereign green bonds.
TNIE had earlier reported that finance ministry would announce green bonds issuance in the second half. The borrowing has been slashed amid fiscal pressures on account of recently announced free food grain distribution for the poor, increased fertilizer subsidy and dearness allowance hike. The government has set a fiscal deficit target of 6.4% of gross domestic product (GDP) for the current fiscal. With a lower than budgeted borrowings in the current financial year, the fiscal deficit figure should have looked better.
But experts believe the nominal GDP growth may get hampered due to the recessionary conditions prevailing across the country. India has budgeted for 11.1% nominal GDP growth rate in FY23. “The gross market borrowing of Rs 5.76 lakh crore (40.5%) shall be completed through 20 weekly auctions. The market borrowing will be spread over 2, 5, 7, 10, 14, 30 and 40-year securities,” the finance ministry statement said. The government in the first half had borrowed Rs 8.45 lakh crore.
Meanwhile, the government has finally after much speculation announced the quantum of money (Rs 16,000 crore) it plans to raise through green bonds. Finance minister Nirmala Sitharaman in her budget speech had announced the Centre’s plan to issue green bonds in the financial year 2022-23 (FY23) as part of its overall market borrowing to mobilise resources for green infrastructure.
To take care of temporary mismatches in government accounts, the Reserve Bank of India has fixed the Ways and Mean Advances (WMA) limit for the second half of FY23 at Rs 50,000 crore. The central bank may trigger fresh floatation of market loans when the Centre utilises 75% of the WMA limit. WMA are temporary advances given by the RBI to the central and state governments to tide over any mismatch in receipts and payments.
Q1 current account deficit widens to 2.8% of GDP
India’s current account deficit, an indicator of the balance of payment position, in the first quarter of the fiscal widened to 2.8% of GDP at $23.9 billion, mainly on account of a higher trade deficit. The current account had a surplus of $6.6 billion, equivalent to 0.9% of GDP, in the first quarter (April-June) of 2021-22. As per RBI daata, the current account balance recorded a deficit of $23.9 billion (2.8% of GDP) in the first quarter.