New Delhi: Even though India’s met department has predicted a below normal monsoon, the finance ministry may not respond to it in the forthcoming budget, people close to the matter said.
The budget is unlikely to contain any additional allocation of funds for agriculture to provide for deficient rainfall, they said on condition of anonymity.
The ministry wants to wait till 15 July before deciding on whether to allocate additional funds, the people said. The budget is scheduled to be presented in Parliament on 6 July.
“July is historically the best rain month. We would like to wait for the progress of the monsoon in July and the impact of crop productivity towards the middle of the month before taking a call on more allocations,” said a person close to the development, who declined being named. “In case there is a need for more allocations, then this could be done through the supplementary demand for grants.
India currently has adequate stocks of wheat and rice. The finance ministry, however, has asked the agriculture ministry to hasten the disbursement of existing allocations and already sanctioned farm loans, particularly in central, northern and north-western parts of the country, which are yet to receive rainfall.
If the rainfall is indeed deficient, the finance ministry may have to exceed its borrowing target of Rs2,41,000 crore for the first half of the fiscal year to March.
“We are trying to front load some more borrowings into H1 (first half of the fiscal), so we may have to exceed the H1 borrowing target somewhat. But we are trying to keep borrowing for the entire fiscal under control so that interest rates are not impacted in the economy,” said another official familiar with the government’s borrowing exercise.
The finance ministry has signalled its intention to keep fiscal deficit under 6% this fiscal year. The budgeted estimates of fiscal deficit, as set out in the interim budget, is 5.5%.