17 Jan 2018 13:04 IST

Govt cuts 2017/18 additional market borrowings to ₹20,000 cr

The Finance Min had said that the Government is likely to borrow additional ₹50,000 crore

The Finance Ministry on Wednesday lowered its additional borrowing plan to ₹20,000 crore for the fiscal from the earlier proposal of raising an extra ₹50,000 crore from the market.

The news sent benchmark 10-year bond yields down over 15 basis points. Last month, the Finance Ministry had said that the Government is likely to borrow additional ₹50,000 crore ($7.79 billion) in 2017/18 fiscal year that ends in March.

“Upon a review of trends of revenue receipts and expenditure pattern, it has been assessed that additional borrowing of only ₹20,000 crore of Government securities would be adequate to meet the financing needs,” the Finance Ministry said.

On December 27, it had said that it will raise additional market borrowing of ₹50,000 crore through dated Government securities in the current financial year, 2017-18.

“Government has reassessed additional borrowing requirements taking note of revenue receipts and expenditure pattern,” said Subhash Chandra Garg, Secretary Economic Affairs.

Government has reassessed additional borrowing requirements taking note of revenue receipts and expenditure pattern. Requirement of additional borrowing being reduced from ₹50000 crore as notified earlier to ₹20000 crore.

— Subhash Chandra Garg (@SecretaryDEA) January 17, 2018

The Finance Ministry further said that the Centre has not accepted borrowings of ₹15,000 crore in the last three auctions. Remaining ₹ 15,000 crore would be reduced from the notified borrowing programme for the ensuing weeks, it added.

However, there will be no change in net borrowings as envisaged in the Budget for 2017-18. The reduced borrowing would help contain fiscal deficit within the target.

The government in the 2017-18 budget had estimated market borrowings at ₹43,000 crore through dated securities for the current fiscal. A decline in revenue collections from the Goods and Services Tax (GST), and lower non-tax revenue have led to worry about government meeting the fiscal deficit target.

The government has budgeted gross and net market borrowings at ₹5.8 lakh crore and ₹4.23 lakh crore, respectively in 2017-18. As per the latest figure, in November 2017 the fiscal deficit target had breached the budget target and touched 112 per cent of the budget estimate for 2017-18 mainly due to lower GST collections and higher expenditure.

(With inputs from Agencies)

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