Centre to limit borrowing in fiscal 2014

Centre to limit borrowing in fiscal 2014

Move to aid growth, spur investment

Centre to limit borrowing in fiscal 2014

As economic growth slows down and capital investment projected to hit a five-year low this fiscal, the government is planning to limit its market borrowing for 2013-14 at current year’s level and  give more space to private investors to access the market.

 The gross market borrowing is also expected to be less owing to the government’s commitment to keep the fiscal deficit at 4.8 per cent of the gross domestic product (GDP) in 2013-14.

 Finance Minister P Chidambaram will announce the gross borrowing figures for the next fiscal year in his budget on February 28.

 “Our market borrowing is going to be the same in the next fiscal year too. It may be less than last year by a margin, but the final figures are yet to be decided,” sources in the finance ministry said.  In fact, in this financial year, the government’s borrowing is expected to be a tad lower than the budgeted Rs 5.7 lakh crore, they said. The government has so far raised Rs 5.48 lakh crore from the market.

A Finance Ministry said that the government won’t breach the fiscal deficit target for this year.

 If the government borrows more from the market, it ties up capital which the banks could otherwise have lent to private businesses. This slows private investment down and thus impacts economic growth.

 Lower government borrowing is expected to boost growth in the economy, which expanded at its slowest pace in July-September quarter owing to high interest rates; sluggish growth overseas hurt consumer demand and investment plans.  The government has already resorted to spending cuts by about Rs 1.1 lakh crore in the current financial year, which is about 8 per cent of budgeted outlay.