Indian govt may miss borrowing target for FY21

NEW DELHI: Indian government is unlikely to stick to the targeted levels of borrowings in current fiscal as additional expenditure and funding needs of stimulus measures would push for higher government debt in the second quarter period, Motilal Oswal Institutional Equities has said in its ecoscope report.

“The government plans to stick to its budgeted target of gross market borrowings for FY21 (BE). This is very difficult to comprehend because of three reasons: tight fiscal position of the central government, additional burden of Rs1.7 lakh crore welfare package and severely impacted government receipts ( especially indirect taxes) due to loss of economic activity at least till mid-april,” the brokerage said.

The government has budgeted to borrow Rs4.88 lakh crore in first half of FY 21. This is 63 per cent of annual borrowings budgeted for the current fiscal, similar to the ratio last year. The borrowing calendar of the government also suggests that, as of now, it plans to stick to its budgeted target.

However, resources to finance additional expenditure on account of measures to contain the adverse impact of COVID-19 pandemic would constrain the government to increase its borrowing later.

“If this is the case, we expect the government to revise its borrowing calendar towards second quarter of FY21 or go for some other means of financing the additional gap,” Motilal Oswal report said.