Millennium Post

Government is overshooting its borrowing targets: experts

The government's announcement to stick to the original borrowing plan is a right step, but it would be difficult to meet the target amid a slowing economy, economists and analysts said today.

'It is very difficult to stick to the budgeted borrowing plan of the current financial year in the wake of under-recoveries of oil marketing companies, among other subsidies. Though the government can do it through raising non-tax revenues [through disinvestment], there is a limit to that also,' Crisil chief economist DK Joshi said.

He, however, said the intention to meet the fiscal deficit target is a step in the right direction.

The government plans to borrow about Rs 5.71 trillion in this fiscal or 5.1 per cent of GDP, out of which it had already borrowed around 65 per cent [Rs 3.7 trillion].

Despite a wide expectation of the government overshooting the borrowing target, the Centre yesterday announced that it would stick to the original plan, creating a hope that it may meet the fiscal deficit target of 5.1 per cent this fiscal.

The announcement has its impact on both the share as well bond markets.

While the Sensex welcomed the news with a 1 percent rally, the bond market reacted with a marginal decline.

On the fiscal deficit, Joshi said his agency sees fiscal gap widening to around 6.2 per cent this fiscal compared to the targeted 5.1 per cent An economist with SBI also echoed similar sentiment.
Next Story
Share it