<p>Cautioning the government that excessive borrowing is bad, Reserve Bank Governor D Subbarao today urged the government to put a cap on the public debt as it would hurt growth.<br /><br /></p>.<p>"There is an inflexion point beyond which fiscal deficits militate against growth. Government borrowing is not bad per se, but excessive borrowing is. There is therefore a need to cap total public debt as a proportion of GDP," Subbarao said in an address at the International Research Conference here.<br /><br />The government's fiscal deficit in 2011-12 is expected to exceed the budget estimate of 4.6 per cent of the GDP on account of subdued receipts and overshooting of the subsidy bill by at least Rs 1 lakh crore over and above the original projection.<br /><br />In order to bridge the receipt-expenditure gap, the government plans to exceed its borrowing target for the current fiscal by Rs 92,000 crore over budget estimate of Rs 4.20 lakh crore.<br /><br />The RBI had also flagged the issue of rising fiscal deficit at several occasions earlier, including its third quarter monetary policy review in the last week of January.<br />The government, as indicated by Finance Minister Pranab Mukherjee, is expected to announce steps to contain fiscal deficit in the budget for 2012-13 to be unveiled sometime in March.</p>
<p>Cautioning the government that excessive borrowing is bad, Reserve Bank Governor D Subbarao today urged the government to put a cap on the public debt as it would hurt growth.<br /><br /></p>.<p>"There is an inflexion point beyond which fiscal deficits militate against growth. Government borrowing is not bad per se, but excessive borrowing is. There is therefore a need to cap total public debt as a proportion of GDP," Subbarao said in an address at the International Research Conference here.<br /><br />The government's fiscal deficit in 2011-12 is expected to exceed the budget estimate of 4.6 per cent of the GDP on account of subdued receipts and overshooting of the subsidy bill by at least Rs 1 lakh crore over and above the original projection.<br /><br />In order to bridge the receipt-expenditure gap, the government plans to exceed its borrowing target for the current fiscal by Rs 92,000 crore over budget estimate of Rs 4.20 lakh crore.<br /><br />The RBI had also flagged the issue of rising fiscal deficit at several occasions earlier, including its third quarter monetary policy review in the last week of January.<br />The government, as indicated by Finance Minister Pranab Mukherjee, is expected to announce steps to contain fiscal deficit in the budget for 2012-13 to be unveiled sometime in March.</p>