New Delhi: The Union government plans to borrow nearly Rs4,00,000 crore from markets during 2009-10, a rise of about 50% over what it borrowed a year ago, to fund the widening fiscal deficit necessitated after stimulus doses for the economy.
The net market borrowing of the government through issue of dated securities in 2009-10 is estimated at Rs3,97,957.46 crore, finance minister Pranab Mukherjee said on Monday while presenting the Budget 2009-10.
Against the Budget estimate of Rs1,00,571 crore for 2008-09, the government borrowed Rs2,61,972 crore to fund increasing expenditure required to insulate the domestic economy from the impact of global financial crisis.
The rise in net borrowing by the Centre would work against decline in interest rates as demanded by industry.
The finance minister said, “To counter the negative fall-out of the global slowdown on the Indian economy, the government responded by providing three focused fiscal stimulus packages in the form of tax relief to boost demand and increased expenditure on public projects to create employment and public assets.”
This fiscal accommodation led to an increase in fiscal deficit from 2.7% in 2007-08 to 6.2% of gross domestic product (GDP) in 2008-09. The deficit is further projected to widen to 6.8% this fiscal.