India to borrow Rs500b as revenues slow

NEW DELHI: India will borrow additional 500 billion rupees ($7.79 billion) this year in a bid to maintain its spending as revenues slow in the $2.3 trillion economy.

The move comes a day after revenue collections from the recently-introduced goods and services tax slowed, raising fears of a fiscal slippage. The government plans to offset the additional borrowing by curbing treasury bills by more than 600 billion rupees, the finance ministry said in a tweet.

The Reserve Bank of India announced the new borrowing calendar for government bonds until the end of the financial year on Mar. 31 in a statement on its website.

While higher borrowing of dated securities is being offset by the reduction in the planned treasury bills, "concerns regarding a mild fiscal slippage persist on account of the sequential dip in GST collections for November," said Aditi Nayar, principal economist at ICRA, a local unit of Moody's Investors Service.

The Asia's third largest economy originally planned to borrow 5.8 trillion rupees for the fiscal year that ends March 31. It stuck to the target in the bond-sale plan for the second half of the year announced in September. The revised calendar released more than a month after sovereign rating upgrade by Moody's Investors Service for the first time since 2004, comes amid rising crude prices and lower tax mop-up.

India's goal is to curb its budget deficit to a 10-year low of 3.2 percent of gross domestic product in the year ending March. The gap in first seven months has reached 96.1 percent of the target. Modi's economic advisers want him to stick to fiscal goals, while some economists favored relaxing fiscal goals to boost spending.