<p>The central government wants federal and state agencies to reduce the pressure on debt markets in order to allow more private sector companies to raise funding through bond issuances, at a time when private investment is seeing a revival in the economy.</p>.<p>The Union Finance Ministry has taken steps to ensure that bond markets are not flooded with debt paper issued by the centre, states and infrastructure creating agencies like railways and National Highways Authority of India (NHAI), a senior official told <em><span class="italic">DH</span></em>.</p>.<p>“The trend in the last few years has given us the confidence that we will not exceed our borrowing target this year,” the official said. The central government’s net market borrowing target for the current financial year (FY24) stands at Rs 11.9 lakh crore.</p>.<p>Borrowing is the biggest source for the centre or states to fund the gap between expenditure and revenues. On paper at least, money raised by governments from the bond markets can only be used to finance public infrastructure projects.</p>.<p>“We have also provided capital expenditure support to the states, so to that extent the states would need to borrow less from the markets,” the official said. Finance Minister Nirmala Sitharaman has given the states support for capex in the form of long-term, interest free loans, totalling Rs 1.3 lakh crore for FY24.</p>.<p>The official also said that the focus on the centre’s own capex means that many bodies will not have to seek external sources of financing. For FY24, the centre’s own capex outlay target is a record Rs 10 lakh crore. The centre is of the view that this should be enough for agencies to implement their infrastructure projects.</p>.<p>What this will do, the centre hopes, is not crowd out private sector bond issuances. After three years of subdued investment in new capacity and infrastructure, the private sector has started spending on investment again, as per data by the government and multiple agencies.</p>.<p>The official said that the central government is also confident that bond yields will drop below 7%, indicative of strong economic growth, and will reduce the centre’s cost of borrowing.</p>
<p>The central government wants federal and state agencies to reduce the pressure on debt markets in order to allow more private sector companies to raise funding through bond issuances, at a time when private investment is seeing a revival in the economy.</p>.<p>The Union Finance Ministry has taken steps to ensure that bond markets are not flooded with debt paper issued by the centre, states and infrastructure creating agencies like railways and National Highways Authority of India (NHAI), a senior official told <em><span class="italic">DH</span></em>.</p>.<p>“The trend in the last few years has given us the confidence that we will not exceed our borrowing target this year,” the official said. The central government’s net market borrowing target for the current financial year (FY24) stands at Rs 11.9 lakh crore.</p>.<p>Borrowing is the biggest source for the centre or states to fund the gap between expenditure and revenues. On paper at least, money raised by governments from the bond markets can only be used to finance public infrastructure projects.</p>.<p>“We have also provided capital expenditure support to the states, so to that extent the states would need to borrow less from the markets,” the official said. Finance Minister Nirmala Sitharaman has given the states support for capex in the form of long-term, interest free loans, totalling Rs 1.3 lakh crore for FY24.</p>.<p>The official also said that the focus on the centre’s own capex means that many bodies will not have to seek external sources of financing. For FY24, the centre’s own capex outlay target is a record Rs 10 lakh crore. The centre is of the view that this should be enough for agencies to implement their infrastructure projects.</p>.<p>What this will do, the centre hopes, is not crowd out private sector bond issuances. After three years of subdued investment in new capacity and infrastructure, the private sector has started spending on investment again, as per data by the government and multiple agencies.</p>.<p>The official said that the central government is also confident that bond yields will drop below 7%, indicative of strong economic growth, and will reduce the centre’s cost of borrowing.</p>
