Sticking to FY24 borrow plan shows fisc comfortable, says govt source
NEW DELHI – By sticking to the Budgeted gross market borrowing target of 15.43 trln this financial year, the government has shown that its finances are comfortable right now, a senior finance ministry official said today. The government is on track to meet the 2023-24 (Apr-Mar) overall receipts target and also the fiscal deficit aim of 5.9% of GDP, the official said.
We have "retained firepower" by keeping borrowing at the predetermined level, the official said.
The government on Tuesday announced it will borrow 6.55 trln rupees through the sale of dated securities in Oct-Mar, having raised 8.49 trln rupees so far, which is 55.02% of the full-year borrowing target. The government is due to sell bonds worth 390 bln rupees on Friday.
A senior government official had told Informist last month that the government may have some space to cut market borrowing for the current financial year because of robust inflows into small savings schemes.
While net inflows into government-run small savings schemes have jumped 46% year-on-year to 1.39 trln rupees in Apr-Jul, it is prudent on the Centre's part to not lower the market borrowing right now because of the possibility of higher spending ahead of the General Election next year.
While the government maintains its stance that it will meet the fiscal deficit target this year, economists have flagged that a fiscal slippage of around 20-30 basis points is possible, taking the fiscal deficit to over 6.0% in the current financial year ending Mar 31.
The government's finances will face additional pressure from the recent surge in crude oil prices. The government is not comfortable with crude oil prices staying above the $90 per barrel mark, the finance ministry official said.
The Oct-Mar borrowing calendar was largely on expected lines, with the introduction of the 50-year tenure bond the only major surprise.
The government is trying to elongate the maturity period of government bonds, the official said. The share of the 40-year bonds in the total issuances has also increased to 18.32% in Oct-Mar, from 17.6% in Apr-Sep.
The government also released the Treasury bill calendar on Tuesday and will raise 3.12 trln rupees through the auction of Treasury bills in Oct-Dec. While the total borrowing in Oct-Dec through Treasury bills is the same as Jul-Sep, the amount of 91-day Treasury bills has gone down to 910 bln rupees from 1.3 trln rupees in the last quarter.
The thinking behind lowering the 91-day Treasury bill supply in Oct-Dec is to keep the redemption in Jan-Mar in check, the official said.
The official also said that the government will augment transparency in its public debt management.
Additionally, the official said that the Centre has met over 40% of 10-trln-rupee capital expenditure target for this financial year, as of early September. End