No plan to cut FY24 market borrowing as of now, says finance ministry source
Informist, Tuesday, May 23, 2023
--Fin min source: No plan to reduce FY24 market borrowing currently
By Priyasmita Dutta
NEW DELHI – The government is not currently looking at trimming its record market borrowing programme for the current financial year started April despite the higher-than-budgeted surplus transfer by the Reserve Bank of India, a senior finance ministry official said.
"There is no plan to cut government's borrowing for 2023-24," the official told Informist.
On Friday, the RBI's central board of directors approved the transfer of 874.16 bln rupees as surplus to the government for the financial year 2022-23. The Budget for 2023–24 pegged the government's revenues from the RBI surplus and dividends by state-owned banks at 480 bln rupees.
Though the RBI transferred the surplus for the financial year 2022-23, it is reflected in the government's accounts for 2023-24 as the transfer is made in the current financial year.
The amount is also sharply higher than the surplus transfer of 303.07 bln rupees for the financial year 2021-22, but lower than bond market's expectation of around 1.0-1.5 trln rupees.
Media reports last week said that government may consider reducing its market borrowing on expectations of a bumper surplus transfer by the central bank.
The government plans to borrow a record 15.43 trln rupees through the sale of dated securities on a gross basis in 2023-24, of which 8.88 trln rupees will be borrowed in Apr-Sep.
Economists said the bumper surplus transfer will help the government to meet its fiscal deficit target of 5.9% of GDP for the current financial year.
"The positive surprise in RBI’s dividend income to the extent of at least 400 bln rupees provides a fiscal buffer of 0.13-0.15% of GDP. This would help mitigate some of the expenditure spillovers that could potentially take place in 2023-24, and thereby help the central government in sticking to the fiscal deficit target of 5.9% of GDP," QuantEco Research said. End
