Govt may retain borrowing target. Here's why it matters

money

Indian Market
by 5paisa Research Team Last Updated: 2022-09-20T22:27:58+05:30

In what could be music to the ears of economists, India could keep its market borrowing plan intact for the financial year and may even reduce the target, a Bloomberg report has said. 

According to the report, the finance ministry is discussing actively in this regard. 

But what has led up to this positive news?

According to the report, an uptick in revenues has ensured that the Indian government may keep or reduce its borrowing plan. 

The government may stick to its borrowing target of Rs 14.3 trillion ($179 billion) for the year through March 2023. There is a chance it might get lowered given the rise in revenue, the report said, citing unnamed sources. 

By when is the finance ministry likely to decide?

A decision would be taken later this month when finance ministry officials hold consultations with the Reserve Bank of India to decide on the borrowing calendar for October-March, which would also include the plan for the country’s first sovereign green bond issuance, according to the Bloomberg report. 

How well have India’s tax collections been growing in the recent past?

India’s tax revenues are growing at a healthy pace, driven by domestic consumption after a wider reopening of the economy from pandemic curbs. 

Net direct tax collections until mid-September rose 23% from a year earlier, while the mop-up from goods and services tax during April to August was 33% higher than the year-ago period. That’s easing pressure on government finances at a time the government had to provide additional resources for food and fertilizer subsidies.  

But are there any takers for Indian debt in the international market?

Yes, according to the report, demand for Indian debt has been more robust than many traders expected in the face of a record borrowing program, helped by speculation over their potential inclusion in global indexes, and record buying by banks. 

If policymakers trim the planned borrowing amount for the second half of the fiscal year, it will improve the outlook from the supply side as well, the report said. 

Start Investing in 5 mins*

Get Benefits worth 2100* | Rs. 20 Flat Per Order | 0% Brokerage

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Open Free Demat Account

& get benefits worth 2100*

Resend OTP
Please Enter OTP
  • Have Promo code?
  • Use code ACT2100
Enter Promo code
Account belongs to

By proceeding, you agree to the T&C.

Start Investing Now!

Open Free Demat Account in 5 mins

Enter Valid Mobile Number