Even after revising the fiscal deficit upward, the Finance Ministry has ruled out additional borrowing, at least for the time being.
Soon after the Finance Minister announced a target of 5.3 per cent for the current year, Economic Affairs Secretary Arvind Mayaram said, “As of today, we have no plan to borrow additionally. However, we will review the situation early next year after taking into consideration the revenue received.”
The Budget for current financial year fixed a target of 5.1 per cent for the fiscal deficit. To bridge this, it made a provision of Rs 5.7 lakh crore as gross borrowing.
The Government has already borrowed Rs 3.7 lakh crore in the first six months (April-September) and has announced plans to raise the remaining amount in the next six months. Mayaram also hoped that there would not be any need for more borrowings. There is possibility of additional revenue from various non-tax receipts, including disinvestment. The strengthening of the rupee would help cut the subsidy bill at least by Rs 10,000 crore, he hoped.
Disinvestment push
Another senior Finance Ministry official said with some improvement in market sentiments, there was renewed effort to kick-start disinvestment in a big way. Simultaneously, the Finance Ministry has announced some austerity measures.
All these are expected to improve the fiscal scenario. That is why the Government is sticking to the proposed borrowing plan, at least for the time being, he added.
However, the market does not share the Finance Ministry’s optimism. Market players expect the Government to raise Rs 45,000 crore more than the budgeted Rs 2 trillion of gross issuance.
They said that the Government would, most probably, announce extra borrowings only in December, once it gets further clarity on disinvestment and the extent of fiscal slippage.