October 26, 2020

Korona Nadyo, Modi government to spend Rs. 4.34 lakh crore will be borrowed

The central government had last May set a target of raising Rs 12 lakh crore in loans this financial year.

New Delhi: The government has not changed its borrowing target during the current financial year (2020-21). The government had in May set a target of raising Rs 12 lakh crore by borrowing in this financial year. The reason for not changing this target is that the government hopes that tax collection will increase in the remaining months of this year, which will help in announcing a relief package to support the economy.

It is now clear that the central government will raise Rs 4.34 lakh crore by borrowing in the second six months of this financial year. That is the remaining part of the target of raising Rs 12 lakh crore. The government had in May changed its target for borrowing to Rs 12 lakh crore this fiscal.

The government had set a target of borrowing Rs 7.8 lakh crore this fiscal in the budget released in February this year. That is more than the Rs 7.1 lakh crore taken in 2019-20. The government borrows from the market through dated securities and treasury bills to cover the fiscal deficit. The budget has set a fiscal deficit target of 3.5 per cent of GDP, down from 3.8 per cent last year.

I had raised this target to Rs 12 lakh crore a month. The reason was that the government believed that it would have to spend more money in the situation arising from the corona. Secondly, the government was also expected to reduce tax collection following the Corona and lockdown.

Meanwhile, figures released on Wednesday show that the government’s fiscal deficit reached Rs 8.7 lakh crore at the end of August this year. This is 9.3 per cent more than the target of Rs 7.96 lakh crore set for the full year. “Revenue has increased since the economy resumed operations in June,” said Tarun Bajaj, economic affairs secretary at the finance ministry.

Bajaj said, “Priorities have been set for spending and it has been decided to increase spending in some areas. At the same time, we have decided that the costs that are currently avoidable should be avoided. ‘

Bajaj said the government had borrowed Rs 7.66 lakh crore in the first six months of September and the remaining Rs 4.34 lakh crore would be borrowed in the second six months of the current financial year.

The government had imposed a lockdown in the country from March 25 to curb the spread of the corona virus. Then from the month of May it was gradually relaxed.

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