Govt to borrow Rs 50, 000 cr more this year

Govt to borrow Rs 50, 000 cr more this year

Facing a shortfall in revenues, the centre on Wednesday announced it would borrow Rs 50,000 crore more from the market this fiscal posing an imminent risk of Budget deficit in 2017-18.  

The gross additional borrowing, which would be done from January to March, will be over and above the Budgeted Rs 5.8 lakh crore for this fiscal. Now, the total market borrowing by the government will be Rs 6.3 lakh crore. This is for the first time since 2012 that the government has resorted to such high additional borrowing.

The move will force the government to breach its fiscal deficit target of 3.2% this year.

This will also imply a fiscal slippage for 2018-19 but it will be known only when Finance Minister Arun Jaitley presents the Union Budget on February one.

The major reason for a short fall in the indirect tax revenue was a lower than expected Goods and Services Tax collection by the government in the past five months. The Budgeted target of indirect tax revenues was Rs 9.2 lakh crore in fiscal 2017-18 but the actual collection in seven months to October were only 5.2 lakh crore.

Added to that, this year the government has to make do with indirect tax collection of only 11 months for an expenditure of 12 months as the GST collections for March would be accounted for only in the April calendar.

The direct tax have also been impacted by a slow down in overall economic growth in the country. Sources in the finance ministry are of the view that the government may revise the direct tax collection target by Rs 20,000 crore. Direct tax collection stood at Rs 4.8 lakh crore at the end of October as against the Budgeted full year target of Rs 9.8 lakh crore.

On the non-tax revenue side, the Centre's earnings from dividends from public sector enterprises, spectrum sale and disinvestment of public sector units have also not been very encouraging so far this year.

Added to that, the Reserve Bank of India has transferred less than half of surplus to the Centre's kitty than last year. The RBI in August announced that it will transfer Rs 30,659 crore as surplus.

The government had also announced Rs 2.11 lakh crore worth of recapitalisation plan for PSU banks last month. Though the plan has been spread over two year, provision for some money would have to be done this year only.

Ashima Goyal, member of Prime Minister's Economic Advisory Committee, said a slippage on fiscal side was expected since the government had undertaken major structural reforms on tax side. She, however, said that it was not a deviation from the glide path.

On whether, the extra borrowing would put pressure on the government's expenditure plan in the remaining period of this fiscal, Goyal said the plan expenditure would not suffer.

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