Govt cuts market borrowing target by Rs 70,000 crore

The government Friday announced reduction in gross marketing borrowing estimate for 2018-19 as it expects "some more funds" from the popular small savings schemes, which will attract higher interest rate in the October-December quarter.

The finance ministry also stressed that the government would meet the fiscal deficit target of 3.3 per cent of GDP during the year ending March 2019.

Giving details about the borrowing programme for the remaining six months of the fiscal, Economic Affairs Secretary S C Garg said the government would be borrowing Rs 2.47 lakh crore as compared to Rs 2.88 lakh crore during April-September of 2018-19.

The Centre will also be launching inflation-indexed bonds, the secretary said, adding one or two bond issues will come in the current fiscal.

The government had budgeted a gross borrowing programme of Rs 6.05 lakh crore, which now stands reduced by Rs 70,000 crore.

"Since our fiscal deficit is not being affected at all, we have decided to continue with the net borrowing programme as it is," he said.

"However, we had some rethink on the buyback programme as well as we expect some more funds to flow from small savings. So, as a result we decided to reduce the total borrowing requirement for the year by Rs 70,000 crore," Garg told reporters here.

Market borrowings are undertaken to bridge the revenue expenditure mismatch or fiscal deficit.

The secretary further said the government was not looking at financing fiscal deficit from any other market means.

"Our borrowing programmes are sufficient for our fiscal needs. We also decided that Ways and Means advances would be Rs 35,000 crore only in the second half. And further in March, it will be kept only at Rs 25,000 crore," he added.

The government resorts to 'Ways and Means' to meet temporary gaps in cash management.

The net borrowing was Rs 2 lakh crore in the first half of the year while it will come down to 1.90 lakh crore in the remaining six months.

The reduction of Rs 70,000 crore through borrowings would be managed by a mix of reducing buybacks as well as additional flows from small savings, he added.

The government will have a borrowing of Rs 11,000 crore per week until beginning of November, and thereafter borrowing of Rs 12,000 crore (as was in the first half of the fiscal).

Garg also said a decision has been taken to introduce inflation indexed bonds during the second half this year.

"Since this is a new instrument, we expect one or two issues to be made in the current half year," he added.

On fiscal deficit, he said the government does not anticipate any slippages on fiscal deficit front.

He expects the revenue collection to be in line with the budget estimates.

"Even the expenditure programme, even after taking into account MSP and Ayushman Bharat, we are on track. Therefore there is no need to revise the fiscal deficit at all. So the FD stays at 3.3 per cent," he added.