India leaves borrowing calendar unchanged — sticks to its ₹12 lakh crore target for the year

• Indian government’s plan for borrowing remains unchanged for the rest of the year.
• The Department of Economic Affairs intimated that the target will remain at ₹12 lakh crore.
• The central government has borrowed ₹7.7 lakh crore so far and has another ₹4.3 lakh crore left in its kitty.

India’s Department of Economic Affairs is maintaining the status quo as far as the borrowing calendar is concerned.

"We have decided to continue with the same figure of ₹12 trillion for the total year. Which means our borrowing for second would be ₹4.34 lakh crore or 36.1% of the 12 trillion to be borrowed for the whole year," said DEA secretary Tarun Bajaj during the press briefing.

Due to the coronavirus pandemic, India saw poor receipts, and government spending had to be stepped up simultaneously. The borrowing target was raised to ₹12 lakh crore in May this year. Even then, there’s money left over — a point that some experts criticise.

In the first quarter, the central government issued dated securities worth ₹3.46 lakh crore as compared to ₹2.2 lakh crore in the same time period, the previous year. In the second quarter, its borrowing through dated papers hit ₹3.6 lakh crore.


This means the central government has already borrowed around ₹7.7 lakh crore in the first half and has ₹4.3 lakh crore left over for the second half of the fiscal year.

Addressing the fiscal deficit
The central government’s way and means advances (WMA) limit has also been trimmed down to ₹1.25 lakh crore from ₹2 lakh crore earlier.

The bigger concern right now is that across sectors and states the fiscal deficit is going to be larger than expected this year. “It could be over 14% or even 15% of the GDP,” estimated SPJIMR professor Ananth Narayan in conversation with CNBC TV18.

According to him, merely putting a stop to borrowing will not be enough to deal with the increasing burden. More fiscal stimulus and more money coming in will be required to handle the deficit.

In the coming months, key factors that will determine the country’s spending include incoming tax receipts, the ‘China’ factor, and how much it may have to shell out for a COVID-19 vaccine as the number of cases continue to rise across the country.

Last year, the government had to resort to the 'escape clause' in the Fiscal Responsibility and Budget Management (FRBM) Act for deviating from the fiscal deficit target to 3.8% from the estimate of 3.3% for 2019-20.

The 'escape clause' gives the government an out. It is allowed to breach its fiscal deficit target by 0.5% in times of severe stress in the economy, including periods of structural change and those when growth falls sharply.

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