Removing high-cost debt has lowered borrowing cost: FM Sitharaman

Sitharaman's comments came in the backdrop of the government's target of bringing down the debt-to-GDP ratio to 50 per cent by 2030, from the current 57 per cent

The Centre is removing the high-cost debt from its shoulders, having already paid for such loans, which has resulted in bringing down the borrowing rates for the government as well as for states, Finance Minister (FM) Nirmala Sitharaman said on Tuesday as Lok Sabha approved the second and final supplementary demands for grant for the current financial year (FY25).

 

Speaking on the discussion on the Second Supplementary Demands for Grant for FY25 in Parliament, Sitharaman said: “When the government engages in active debt management, which is a dynamic process by very nature, and is aiming at reducing the cost of borrowing for both the Union and the states, the government needs to have requisite flexibility to attain that objective.”

 

Sitharaman’s comments were in the backdrop of the government’s target of bringing down the debt-to-GDP ratio to 50 per cent by 2030 from 57 per cent at present.

 

The FM highlighted that for prudent fiscal management, about ₹85,000 crore of government securities were bought back, and about ₹99,000 crore redemption of 91 days T-bills was undertaken.

 

The government has sought the approval of Parliament for a gross additional expenditure of ₹6.78 trillion, involving a net cash outgo of ₹51,463 crore, through the second supplementary demand for grant.

 

The Lok Sabha also approved the FY26 Budget, and supplementary demands for grant FY25 for Manipur, currently under President's rule. The FM said that the Centre is providing all the financial assistance to support a faster recovery of the economy for Manipur. “With the collective effort of both the Centre and the state government, there has been an improvement in the overall law and order situation in the state to a large extent,” Sitharaman said.