Government unlikely to curtail borrowing programme for FY16

The government has decided not to cut its annual borrowing this fiscal as it wants to keep public spending high in order to keep growth engines running. “We will continue the borrowing programme as per the target and there is no proposal to cut,” official sources said. Government has decided to keep public expenditure high as private investment is not picking up, sources said, adding that the major thrust of government expenditure is on infrastructure development. The government, as per the Budget papers, planned to borrow a total of Rs 6.01 lakh crore from the market this fiscal. It had already borrowed about Rs 3.5 lakh crore in the first half of the financial year, which is over 50 per cent of the annual target. In the second half (October-March), it plans to raise Rs 2.49 lakh crore through market borrowings. The net borrowings in 2015-16 is pegged at Rs 4.56 lakh crore, after considering repayments of past loans and interest.

The government borrows money from the market through treasury bills and other instruments to fund its fiscal deficit. The government had borrowed Rs 5.92 lakh crore in 2014-15. The government plans to reduce the deficit to 3.9 per cent of GDP this fiscal from 4 per cent last fiscal.