The Reserve Bank of India said that the Government has decided to cancel its Rs.20,000 crore borrowing scheduled for March 26 on review of position of cash balance. As per the revised Issuance Calendar issued on February 1,2021 for Government of India Dated Securities, the next action was scheduled on March 26. The RBI declared about the cancellation of the borrowing on Monday.
While announcing the Budget for 2021-22, Finance Minister Nirmala Sitharaman had said,” The gross borrowing from the market for the next year (2021-22) would be around Rs.12 lakh crores. We plan to continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5 percent of GDP by 2025-26 with a fairly steady decline over the period.” As per the Revised Estimate, the gross borrowing for the current financial year was raised to Rs.12.8 lakh crore as against the Budget Estimate of Rs.7.8 lakh crore, registering an increase of 64 percent.
The RBI said in a statement,” On review of position of cash balance, the Government of India has decided to cancel the above scheduled auction. ”The Government would be now borrowing Rs.20,000 crore less than its target of Rs.12.8 lakh crore, which was announced in the Budget for the current fiscal year on February 1st.
The Budget has set fiscal deficit at 6.8 percent for the next fiscal year, which is lower than 9.5 percent of the GDP in the current financial year. The fiscal deficit in RE 2020-21 is pegged at 9.5% of GDP. To fund its fiscal deficit, the government raises money from the market through dated securities and treasury bills. Consequently, net borrowing will come down to Rs.9.24 lakh crore for the next fiscal and for the current fiscal year it is estimated at Rs.10.52 lakh crore during 2020-21.
Bhoi Smrutirekha Dharanidhar