Government will frontload its borrowing programme by issuing government securities worth ₹4.88 trillion or 62.56% of its gross borrowing target for FY21 in the first half (April-September) of the year. In FY20 also, the finance ministry had issued bonds worth 62.25% of its full-year target of ₹7.1 trillion.
Economic affairs secretary Atanu Chakraborty said government has factored in higher spending due to Covid-19 outbreak and will provide all necessary help for health sector, for recovery of the industry and any stimulus needed for the economy.
Finance ministry has also proposed to roll out G-sec issuance through debt Exchange Traded Fund (EFT) route by initiating appointment of required intermediaries.
Aditi Nayar, principal economist at ICRA Ltd said the meaningfulness of the revenue and expenditure growth assumptions made in the Union and various state budgets for FY2021, has drastically reduced following the rapid escalation of the current crisis. “The loss of economic activity is expected to dampen tax collections in Q1 FY2021, which would constrain the cash flows of the Central and state governments. Additionally, expenditure may rise sharply in H1 FY2021, especially if additional stimulus programmes are provided to dull the impact of the ongoing crisis on livelihoods and economic activity," she added.