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| UPDATE: Govt to borrow more to fund higher outlay in FY10 |
| Press Trust of India / New Delhi Jul 06, 2009, 17:25 IST |
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The government plans to borrow nearly Rs 4,00,000 crore from markets during 2009-10, a rise of about 50 per cent over what it borrowed a year ago, to fund the widening fiscal deficit necessitated after stimulus doses for the economy.
The net market borrowing of the government through issue of dated securities in 2009-10 is estimated at Rs 3,97,957.46 crore, Finance Minister Pranab Mukherjee said today while presenting the Budget 2009-10.
Against the Budget estimate of Rs 1,00,571 crore for 2008-09, the government borrowed Rs 2,61,972 crore to fund increasing expenditure required to insulate the domestic economy from the impact of global financial crisis.
The rise in net borrowing by the Centre would work against decline in interest rates as demanded by industry.
The Finance Minister said, "To counter the negative fall-out of the global slowdown on the Indian economy, the government responded by providing three focused fiscal stimulus packages in the form of tax relief to boost demand and increased expenditure on public projects to create employment and public assets."
This fiscal accommodation led to an increase in fiscal deficit from 2.7 per cent in 2007-08 to 6.2 per cent of GDP in 2008-09. The deficit is further projected to widen to 6.8 per cent this fiscal.
Gross market borrowing as per the Budget estimate of 2009-10 is Rs 4,51,093.25 crore taking into account scheduled repayment of Rs 53,135.79 crore.
Mukherjee said rising borrowing is leading to increase in interest payments by the Centre. Interest payments are estimated at Rs 2,25,511 crore, constituting about 36 per cent of Non Plan revenue expenditure in 2009-10.
This level of deficit, he said, is a matter of concern and the government will address this issue in right earnest to come back to the path of fiscal consolidation at the earliest.
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