Centre likely to stick to its borrowing plan for H2FY15

The market borrowings are one of the sources for funding the fiscal deficit along with tax and non-tax revenues.

The government is unlikely to increase its market borrowings in the second half of the fiscal as it banks on a modest economic recovery and big ticket stake sales to help fund the fiscal deficit.

A final decision will be taken later this month when the finance ministry and the Reserve Bank of India chalk out the Centre’s borrowing plan for the second half of 2014-15. “The meeting is scheduled for September 26 but it is unlikely that we will deviate from the Budget target,” said the official.

The Union Budget 2014-15 had pegged the Centre’s gross market borrowings at Rs 5.97 lakh crore with the net borrowings at Rs 4.61 lakh crore. Of this, while Rs 3.68 lakh crore was earmarked to be raised as market borrowings between April and September 2014, the balance Rs 2.3 lakh crore will be raised between October 2014 and March 2015.

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The market borrowings are one of the sources for funding the fiscal deficit along with tax and non-tax revenues.

However, despite an ambitious fiscal deficit target of 4.1 per cent of the GDP, the finance ministry is hopeful that it is achievable as it is banking on improvement in tax revenues and funds from disinvestment in public sector units.

“As of now, things are looking up and we don’t have a requirement of additional fund raising. It can be reviewed later in the year,” said the official. During the fist half of the fiscal as well, the government has pruned the borrowing programme by Rs 16,000 crore to Rs 3.52 lakh crore, with the objective to provide more liquidity in the system.

While the second tranche of advance tax payments that were deposited by September 15 are showing a marked improvement, the Centre is also betting heavily on disinvestment proceeds that are pegged at Rs 58,425 crore this fiscal.