The Union governments internal debt service liabilities are expected to rise sharply by almost 19 per cent in 1998-99, according to the interim budget presented by finance minister Yashwant Sinha in Parliament yesterday. This is mainly due to a hefty Rs 14,800 crore loan principal repayment due next fiscal.
To meet this debt service burden and other expenses, the borrowings of the government are budgeted to rise by a whopping 64 per cent net of repayments. Debt service interest and principal repayments is expected to rise to Rs 90,803 crore in 1998-99. For the current fiscal, the revised estimates peg this liability at Rs 76,603 crore.
Among the securities due for payment in 1998-99 are Rs 4,900-crore worth of government stock, and zero-coupon securities worth Rs 3,000 crore. In the next financial year, these will comprise the single largest loan repayment outgos from government accounts.
Government sources said here yesterday that the debt service liability in 1997-98 would actually have shown a much sharper increase but for deft cash management by the Reserve Bank of India (RBI). This allowed the surpluses of the government to be invested in its own securities. As a result, interest payments were kept in check and did not balloon.
Interest payments in 1997-98 have been pegged at Rs 65,700 crore as against budget estimates of Rs 68,000 crore. For the next fiscal, interest payments are expected to be around Rs 76,000 crore, which is a 16 per cent rise over the revised estimates of the current year.
Loan repayments during the current fiscal was Rs 10,903 crore. Gross borrowings for the next fiscal are budgeted to go up to almost Rs 70,000 crore as against the current fiscals revised estimate of Rs 44,428 crore a rise of about 58 per cent. The net borrowing target (Rs 55,099 crore) is almost in line with the next fiscal years estimated revenue deficit of Rs 54,888 crore.
Last year, the governments debt stock also increased on account of the Rs 12,900 crore oil bonds, which deferred payments to the oil companies on account of the oil pool account by ten years. But for this arrangement the net market borrowing would have actually been lower by the same amount for the current fiscal year.
