Govt likely to stick to market borrowing plan for raising Rs 6.55 lakh crore

The government is likely to stick to its borrowing plan for raising Rs 6.55 lakh through the sale of bonds in the market during the second half of the current financial year (October to March, 2024).

A senior official said that although revenue collections have been robust with both GST and direct tax collections showing a sharp increase in the current financial year, there is no plan, as of now, to reduce borrowing.

Sources said that the government wants to keep up the momentum of its investments in the big ticket infrastructure projects as this is driving growth and generating employment in the economy. Besides, expenditure on social welfare and healthcare schemes has to be maintained in the run-up to the Lok Sabha polls and assembly elections in some states. A comfortable cash flow would help to make timely disbursements.

Finance Ministry had announced that it would borrow Rs 15.43 lakh crore during the 2023-24 financial year of which Rs 8.88 lakh crore has already been raised during the first six months (April-Sept).

The borrowing schedule for the next six months will be announced by the end of September after a meeting between officials of the finance ministry and the RBI on the issue.

The government has to draw up a prudent borrowing schedule that is judiciously spread out so that other borrowers are not squeezed out of the market.

If the government goes in for excessive borrowings this leaves fewer funds with banks to lend to corporates and consumers which dampens overall demand in the economy and slows down growth, the official explained.