The finance ministry in consultation with the Reserve Bank of India (RBI) will decide the borrowing calendar for the second half of the current fiscal in the last week of this month, sources said. As per the announcement made in May, the government intends to borrow remaining Rs 5.02 lakh crore out of Rs 12 lakh crore during the October-March period to meet rising expenditure to combat COVID-19 crisis amidst moderation in tax collections.
The exact date for the meeting to decide the borrowing calendar is yet to be fixed but most likely it should happen in the last week of this month, the sources said. The government had envisaged to raise 58 per cent of the total borrowing target of Rs 6.98 lakh crore from the dated securities in the first half of the current fiscal.
During first quarter of 2020-21, the central government issued dated securities worth Rs 3,46,000 crore as against Rs 2,21,000 crore in the same period a year ago. In the second quarter, the borrowing through dated papers has touched Rs 3.60 lakh crore as of September 18. Thus, total borrowing so far this fiscal has been Rs 7.06 lakh crore, exceeding the government borrowing plan of Rs 6.98 lakh crore. This leaves the room for borrowing of less than Rs 4.94 lakh crore in the second half of the financial year.
One more borrowing as per the calendar is likely to take place on September 25 of Rs 30,000 crore. After that, the borrowing for the remaining six months of the current fiscal will be limited to Rs 4.64 lakh crore if the government does not raise its borrowing level beyond Rs 12 lakh crore. Hard-pressed for funds to combat rising coronavirus infections, the government in May increased its market borrowing programme for the current financial year by more than 50 per cent to Rs 12 lakh crore.
Finance Minister Nirmala Sitharaman in the 2020-21 Budget, presented in Parliament in February, had pegged the gross market borrowing — which is also a reflection of fiscal deficit –, for the current fiscal at Rs 7.80 lakh crore. The amount was up from Rs 7.1 lakh crore in 2019-20. However, in view of the impact of the lockdown on tax collection and the need to garner additional resources to fight the pandemic, the government decided to substantially increase the market borrowing programme for the current fiscal by about 54 per cent or Rs 4.2 lakh crore.
The government raises money from the market to fund its fiscal deficit through dated securities and treasury bills. The Budget has pegged fiscal deficit at 3.5 per cent for the next fiscal, down from 3.8 per cent of the GDP in the current financial year.
Last fiscal, the government had to resort to the 'escape clause' in the Fiscal Responsibility and Budget Management (FRBM) Act for deviating from fiscal deficit target to 3.8 per cent from the Budget estimate of 3.3 per cent for 2019-20. The 'escape clause' allows the government to breach its fiscal deficit target by 0.5 percentage points in times of severe stress in the economy, including periods of structural change and those when growth falls sharply.
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