Centre cuts gross borrowing for second half by ₹70,000 crore

Subhash Chandra Garg  the economic affairs secretary says the government is confident of meeting the fiscal deficit target of 3.3% of GDP. The government on Friday decided to cut gross borrowing by ₹70,000 crore to ₹2.47 trillion in the October-March period of the fiscal year. Briefing reporters, economic affairs secretary Subhash Chandra Garg said the government was confident of meeting the fiscal deficit target of 3.3% of GDP as revenue collection and expenditure had been in line with budget estimates.

The government chose to borrow ₹2.88 trillion, or 48% of its annual target, in the first half of this fiscal year, departing from its usual practice of frontloading borrowing, amid rising yields and diminishing demand for government securities.

The economic affairs secretary said small savings schemes would provide an alternative which should help the government avail a higher net amount from the National Small Savings Fund (NSSF), compared to its target of ₹75,000 crore in 2018-19. After keeping them unchanged for two quarters, the finance ministry on Thursday hiked interest rates on small savings schemes, which are linked to the yields for government of India securities, by 30-40 basis points for the quarter starting October. This is largely in line with the uptrend displayed by gilt yields of various maturities during the trailing three months.

Finance minister Arun Jaitley earlier this month sent a strong signal for fiscal prudence by committing to the fiscal deficit as well as capital expenditure targets in a pre-election year.

“The government is confident of meeting the 3.3% (of GDP) fiscal deficit target. So far, the government has spent 44% of the budgeted capital expenditure till August 31 and there will be no cuts in capex by the end of this year,” Jaitley had said.