Govt borrowings may come down this year

R. Ravikumar Updated - March 12, 2018 at 12:36 PM.

Scope for reduction: The RBI Governor, Dr D. Subbarao, with the Secretary, Economic Affairs, Mr R. Gopalan,; and Deputy Governors Dr K. C. Chakrabarty and Dr Subir Gokarn, at the RBI’s board meeting in Chennai on Thursday. — Bijoy Ghosh

Mr R. Gopalan, Secretary, Department of Economic Affairs, today hinted that government borrowings are likely to come down this year.

Answering a question on the liquidity issue, on the sidelines of the Reserve Bank of India’s board meeting here, Mr Gopalan said: “We are trying to see if we can reduce borrowings. I think there is some scope for reduction this year.”

Higher government borrowings from the domestic market crowd out the private sector from the market, while greater reliance on external debt worsens the country’s balance of payments position. If the government implements its strategy to reduce borrowings, it will benefit India Inc.

A couple of months ago, the then Finance Minister, Mr Pranab Mukherjee, said the government’s net borrowing for 2012-13 is estimated at Rs 4.79 lakh crore.

This, along with cash management bills of about Rs 90,000 crore, works out to around Rs 5.69 lakh crore. This is higher than in 2011-12, when the net borrowing programme was estimated at Rs 3.58 lakh crore.

Outstanding debt

As per Finance Ministry data, the government’s outstanding debt stood at Rs 41.7 lakh crore as of March 31, 2012.

On a year-on-year basis, the outstanding borrowings rose by 17.2 per cent (Rs 6.12 lakh crore) in 2011-12. In contrast, outstanding borrowings had risen at a slower pace of 11.6 per cent in FY11 and 12.3 per cent in FY10.

While external debt rose by 15.4 per cent in FY12, the government’s domestic borrowings shot up by 20.8 per cent and other liabilities crept up by 1.7 per cent year-on-year.

Further, to a question on FDI in multi-brand retail, Mr Gopalan said: “We are closely watching the situation, and waiting for the right political atmosphere to take it forward.”

>rravikumar@thehindu.co.in

(With inputs from Arvind Jayaram, BL Research Bureau)

Published on July 5, 2012 12:10