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Govt to miss borrowing target for FY21 over COVID-19 expenditure
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SME Times News Bureau | 02 Apr, 2020
Government is unlikely to stick
to the targeted levels of borrowings in current fiscal as additional
expenditure and funding needs of stimulus measures would push for higher
government debt in the second quarter period, Motilal Oswal
Institutional Equities has said in its ecoscope report.
"...the
government plans to stick to its budgeted target of gross market
borrowings for FY21 (BE). This is very difficult to comprehend because
of three reasons: tight fiscal position of the central government,
additional burden of Rs 1.7 lakh crore welfare package and severely
impacted government receipts (especially indirect taxes) due to loss of
economic activity at least till mid-April," the brokerage said.
The
government has budgeted to borrow Rs 4.88 lakh crore in first half of
FY 21. This is 63 per cent of annual borrowings budgeted for the
current fiscal, similar to the ratio last year. The borrowing calendar
of the government also suggests that, as of now, it plans to stick to
its budgeted target.
However, resources to finance additional
expenditure on account of measures to contain the adverse impact of
COVID-19 pandemic would constrain the government to increase its
borrowing later.
"If this is the case, we expect the government
to revise its borrowing calendar towards second quarter of FY21 or go
for some other means of financing the additional gap," Motilal Oswal
report said.
Earlier this week, the RBI announced opening up of
government securities und er the 'Fully Accessible Route' (FAR) to
non-resident invest ors without any limits, except of the fact that
those securities will also be available for domestic investors. These
are securities of 5, 10 and 30-year tenor and are called 'specified
securities'.
Although there is no clarity on how much the
government targets to borrow through this route, it certainly implies
that government is looking for other ways to finance its FY21 spending,
the brokerage said.
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Customs Exchange Rates |
Currency |
Import |
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US Dollar
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84.65 |
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75.65 |
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56.85 |
As on 13 Aug, 2022 |
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