India to make Rs50,000 crore additional borrowing from govt securities

New Delhi:The government on Wednesday said it has decided to make additional borrowing of Rs50,000 crore this fiscal through dated securities, a move that may put burden on the fiscal deficit target of 3.2% of gross domestic product (GDP).

However, there will be no change in the net borrowing as envisaged in the budget for 2017-18, a finance ministry statement said. After the review of the borrowing programme with the Reserve Bank of India (RBI), it was decided that “the government will raise additional market borrowings of ₹ 50,000 crore only in fiscal FY’18 through dated Government securities.”

Besides, it will trim down the T-Bills from present collections of Rs86,203 crore to Rs25,006 crore by March 2018. T-Bills are securities with short-term duration of less than one year while dated securities have maturity of over five years.

“The government will thus, between now and March 2018, not be raising any net additional borrowing (T-Bills will be run down by ₹ 61,203 crore and additional G-Sec borrowing will be ₹ 50,000 crore),” it said. In the budget for 2017-18, gross and net market borrowing were pegged at ₹ .80 trillion and ₹ .23 trillion respectively with ₹ .48 trillion being raised (net) from dated government securities and ₹ ,002 crore from T-bills, a finance ministry statement said.

Noting that borrowings till 26 December 2017 have been conducted in line with the borrowing calendar fixed for the fiscal, it said, gross and net market borrowings are Rs5,21,000 crore and Rs3,81,281 crore, excluding buyback/switches, respectively as on December.

As against the budgeted net T-bills receipt of Rs2,002 crore, net collections till 26 December 2017 are Rs86,203 crore, it said. The government had pegged the fiscal deficit target of 3.2% of the GDP for the current fiscal. Additional borrowing by the government may have impact on the fiscal math.

Since the revenue collection from the goods and services tax (GST) is slightly lower than the expected in the last two months, the additional borrowing would help bridge the shortfall. The GST collections slipped to their lowest in November as rates were cut on dozens of goods to make the new national sales tax regime more acceptable.

Total collections under the GST, which is the amalgamation of the excise duty, service tax, VAT and several other indirect taxes, in November slipped for the second straight month to Rs80,808 crore, down from over Rs83,000 crore in the previous month.

The revenue collections in October were Rs83,346 crore, down about Rs12,000 crore from the September figure of Rs95,131 crore. The statement further said, revised G-sec and T-Bill calendar for the fourth quarter of 2017-18 are being notified.

The revised G-Sec borrowing would be Rs15,000 crore each last five weekly auctions of this fiscal ending on 9 February 2018. The revised T-Bill borrowing will be Rs14,000 crore each in first 13 weeks of 2018 ending on 28 March.