<p>Finance Minister <a href="https://www.deccanherald.com/tags/nirmala-sitharaman">Nirmala Sitharaman</a> will present the <a href="https://www.deccanherald.com/union-budget-2025">Union Budget</a> on February 1. As per reports, <a href="https://www.deccanherald.com/tags/narendra-modi">Modi</a> government is considering cutting income tax for individuals earning up to Rs 15 lakhs per annum in February's budget to provide relief to the middle class and boost consumption as the economy slows.</p><p><br>In light of the upcoming Budget, we take a look at some of the terms associated with the exercise.</p>.<p><strong>What is government borrowing?</strong></p><p>The government borrows through the issue of government securities called G-secs and Treasury Bills. It is a loan taken by the government that falls under capital receipts in the Budget document. Whenever the tax and non-tax revenue falls short to finance the government's spending, the government announces an annual borrowing programme in the Budget every year.</p>.Union Budget 2025 | FAQs: What are tax and non-tax revenues?.<p><strong>Where does the govt borrow from?</strong></p><p>It borrows from the market, small savings funds, state provident funds, external assistance and short-term borrowings. Market borrowing, however, is the major source to finance the fiscal deficit.</p>.<p><strong>Does borrowing have an adverse impact on the economy?</strong></p><p>It has two kinds of impact. One, if the government borrows more from the market, it implies that it has left very little space for the private sector and corporates to access the market.</p><p>Secondly, large govt borrowing shoots up the interest rates for all other borrowers in the market, in turn, it increases the debt repayment burden of the government and also pushes up the rate of investment in the economy which in turn leads to slowing economic growth.</p>
<p>Finance Minister <a href="https://www.deccanherald.com/tags/nirmala-sitharaman">Nirmala Sitharaman</a> will present the <a href="https://www.deccanherald.com/union-budget-2025">Union Budget</a> on February 1. As per reports, <a href="https://www.deccanherald.com/tags/narendra-modi">Modi</a> government is considering cutting income tax for individuals earning up to Rs 15 lakhs per annum in February's budget to provide relief to the middle class and boost consumption as the economy slows.</p><p><br>In light of the upcoming Budget, we take a look at some of the terms associated with the exercise.</p>.<p><strong>What is government borrowing?</strong></p><p>The government borrows through the issue of government securities called G-secs and Treasury Bills. It is a loan taken by the government that falls under capital receipts in the Budget document. Whenever the tax and non-tax revenue falls short to finance the government's spending, the government announces an annual borrowing programme in the Budget every year.</p>.Union Budget 2025 | FAQs: What are tax and non-tax revenues?.<p><strong>Where does the govt borrow from?</strong></p><p>It borrows from the market, small savings funds, state provident funds, external assistance and short-term borrowings. Market borrowing, however, is the major source to finance the fiscal deficit.</p>.<p><strong>Does borrowing have an adverse impact on the economy?</strong></p><p>It has two kinds of impact. One, if the government borrows more from the market, it implies that it has left very little space for the private sector and corporates to access the market.</p><p>Secondly, large govt borrowing shoots up the interest rates for all other borrowers in the market, in turn, it increases the debt repayment burden of the government and also pushes up the rate of investment in the economy which in turn leads to slowing economic growth.</p>