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The Finance Ministry on Wednesday announced that it would scale back its additional borrowing to ₹20,000 crore for the fiscal, from its earlier plan to raise an extra ₹50,000 crore from the market.
“The government has reassessed additional borrowing requirements taking note of revenue receipts and expenditure pattern,” said Subhash Chandra Garg, Secretary, Department of Economic Affairs.
The Ministry further said the Centre has not accepted borrowings of ₹15,000 crore in the last three auctions. “The remaining ₹15,000 crore would be reduced from the notified borrowing programme of the ensuing weeks,” it added.
On December 27, the Finance Ministry had said it would raise additional market borrowing of ₹50,000 crore through dated Government securities in the current financial year.
Following the announcement, the yield on the 10-year government security dropped by16 basis points to close at 7.22 per cent, the lowest since November 2016.
Fiscal deficit The reduction in the additional borrowing could also ease pressure on the Centre’s fiscal deficit, which had breached the Budget estimate by 12 per cent by November end.
With the announcement coming just two weeks ahead of the Union Budget 2018-19, analysts said the Centre is likely to meet its fiscal deficit target of 3.2 per cent for 2017-18, while setting a more relaxed target for next fiscal.
“This will have a direct impact on the fiscal deficit. The Centre may make a marginal slippage this fiscal,” said DK Srivastava, Chief Policy Advisor, EY (India).
Noting that the Centre would be keen to maintain its fiscal consolidation roadmap in the year that it secured a sovereign rating upgrade, another analyst said the government may partially relax its fiscal deficit for 2018-19 by a small margin.
“It is expected that the Centre will meet its target in 2017-18, while partially modifying it for 2018-19,” said Richa Gupta, Senior Director, Deloitte Haskins & Sells .
Direct tax mop-up Tax collections too have presented a mixed picture. Direct tax collections rose 18.7 per cent by January 15 to ₹6.89 lakh crore, which represents 70.3 per cent of the total Budget Estimates of ₹9.8 lakh crore for the fiscal.
“Gross collections have increased by 13.5 per cent to ₹8.11 lakh crore by January 15,” said the Finance Ministry, adding that refunds of ₹1.22 lakh crore have been issued in the period.
On the other hand, GST revenue fell for the second straight month in December to ₹80,808 crore from ₹83,346 crore in November.
Divestment hopes There are expectations that the proceeds from disinvestment, which are currently at ₹54,337.60 crore, may exceed the Budgeted target of ₹72,500 crore.
\There could also be some expenditure tightening and internal savings towards the end of the fiscal.
According to the medium-term fiscal policy statement, the Centre plans to lower its fiscal deficit to 3 per cent of GDP by 2018-19. The Finance Ministry is also expected to review the recommendations of the NK Singh Committee report on the FRBM Act.
Union Budget 2017-18 had pegged the Centre’s gross borrowing target at ₹5.8 lakh crore and net borrowings at ₹4.25 lakh crore.
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