The government is not planning on borrowing more money to manage the fiscal deficit.
The government will adhere to the borrowing target set for the current fiscal year despite lower levies on petroleum products and other items resulting in income losses.
Earlier this week, the government cut the excise tax on petrol by Rs 8 per litre and diesel by Rs 6 per litre to combat soaring fuel prices. This has pushed inflation to multi-year highs.
It also offered a Rs 200 per cylinder LPG subsidy to nearly nine crores Pradhan Mantri Ujjwala Yojana participants.
Due to fuel and diesel taxes, the government would lose roughly Rs 1 lakh crore per year.
The government announced a fertiliser subsidy of Rs 1.05 lakh crore in the Budget (for the current fiscal year).
It has also allocated Rs 1.10 lakh crore to help farmers cope with price increases caused by fertiliser shortages.
Government Borrowing this fiscal year
All the perks mentioned above would force the government to borrow more to satisfy its fiscal deficit target of 6.4 per cent of GDP.
On the other hand, official sources claim that the government has no plans to borrow more money to compensate for the duty loss.
The government will keep to its borrowing schedule for this fiscal year.
For the current fiscal year, the government set a gross market borrowing goal of Rs 14.31 lakh crore in the Budget.
Rs 8.45 lakh crore is expected to be borrowed in the first half of the fiscal year, from April to September.
According to the Union Budget paper, the overall market borrowing through dated securities will be Rs 14,95,000 in 2022-23.
The overall market borrowing through dated securities for 2022-23 is estimated to be Rs 14,31,352 crore, based on switch operations on January 28, 2022.
For the fiscal year 2021-22, the total loan was Rs 12,05,500.
The government estimated a budget deficit of 6.4 per cent of GDP based on its borrowing plans.
Nirmala Sitharaman stated the budget deficit for 2022-23 is expected to be 6.4 per cent of GDP, which is in line with her fiscal consolidation plan to reduce the deficit to below 4.5 per cent by 2025-26.
“As I determine the budget deficit for 2022-23, I’m conscious of the need to foster development through public investment for the economy towards becoming stronger and more sustainable,” she added
Read More – Centre To Spend an Additional $26 billion in FY23 to fight inflation
