Govt hikes borrowing limit by over 50% to Rs 12 trn as virus grips economy

Sources say the Centre has asked RBI to do whatever to keep yields in check, which may result in massive secondary market bond purchases

Anup Roy & Arup Roychoudhury | Mumbai/New Delhi
Last Updated at May 9, 2020 02:00 IST

borrowing, fiscal deficit, market, stimulus

Increased borrowing means the 2020-21 fiscal deficit target of 3.5 per cent of gross domestic product (GDP) no longer holds, since borrowing is one of the means of financing the deficit. Illustration: Binay Sinha

The government on Friday steeply revised its 2020-21 borrowing programme by 53.85 per cent to Rs 12 trillion from Rs 7.8 trillion estimated earlier, indicating that the Centre was giving shape to an imminent and sizeable fiscal package to address the Covid-19-related slowdown. “The above revision in borrowings has been necessitated on account of the Covid-19 pandemic,” the Reserve Bank of India (RBI) said in a statement on its website.

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