Govt to cut market borrowing target by ₹70,000 crore

Gross borrowing to be at ₹2.47 lakh crore for the Octmar period, says economic affairs secretary Garg

NEW DELHI: The government will cut borrowing by ₹70,000 crore in the current fiscal year, signalling its confidence in keeping the fiscal deficit under control.

Economic affairs secretary Subhash Chandra Garg said on Friday that gross borrowing will be at ₹2.47 lakh crore for the October-march period. The borrowing programme will be spread across 21 weekly auctions of government bonds, ending the calendar on March 8, Garg added.

The cut in borrowing will be matched by a reduction in buyback of government securities and enhanced flow from small savings schemes.

The government has also decided to introduce retail inflation-indexed bonds during the second half of the fiscal. “Since this will be a new instrument, we expect one or two issues to be made by end-march.”

While announcing its borrowing programme of ₹2.88 lakh crore for the April-september period, Garg had said in March that overall borrowing during the financial year will be ₹50,000 crore less than the budgeted ₹6.05 lakh crore. With a further reduction of ₹20,000 crore in planned gross market borrowing in 2018-19, which includes buybacks and repayments, stands at ₹5.35 lakh crore, compared to the ₹5.99 lakh crore borrowed last year.

Garg said the government does not anticipate any fiscal slippage in 2018-19. “We believe revenues will be as per the budget estimates. Expenditure programme is also on track even after including expenditure related to higher minimum support price and Aayushman Bharat.”

Small savings schemes will provide an alternative which should help the government avail a higher net amount from the National Small Savings Fund (NSSF), compared to its target of ₹75,000 crore in 2018-19, Garg added.

The finance ministry on Thursday increased interest rates on small savings schemes, which are linked to the yields of

government securities, or G-sec, by 30-40 basis points for the quarter starting October 1. This was largely in line with the uptrend displayed by G-sec yields of various maturities, during the trailing three-month period.

Finance minister Arun Jaitley earlier this month sent a strong signal of fiscal prudence by committing to the targets for fiscal deficit as well as capital expenditure in a pre-election year.

“Government is confident of meeting the 3.3% (of GDP) fiscal deficit target. So far, the government has spent 44% of the budgeted capital expenditure till August 31 and there will be no cuts in capex by the end of this year,” Jaitley had said.