The gross indebtedness of the government has more than doubled in the last four years. (file)
New Delhi:
Two sources close to the deliberations said the Indian government is likely to keep its gross market borrowing below 16 trillion rupees ($196 billion) for 2023/24 as it does not want to destabilize the bond market with any negative surprises. Wants to
“The feedback from market participants is that 15.5-16 trillion rupees of borrowing could well be absorbed in the next fiscal year,” an official told Reuters.
The second official said that based on the discussions within the government so far, the view has emerged that borrowing should be in line with market expectations.
The government has so far raised 12.93 trillion rupees as of January 27, which is 91% of its total gross borrowing target of 14.21 trillion rupees in the 2022/23 fiscal year that ends March 31.
Traders await the Union Budget on February 1, with the government’s fiscal consolidation path and its borrowing calendar for fiscal 2024 set to be the next market-moving trigger.
The government’s gross indebtedness has more than doubled in the past four years as Prime Minister Narendra Modi’s government spent heavily to cushion the economy from the impact of the COVID-19 pandemic and provide relief to the poor.
India’s finance ministry did not immediately respond to an email and message seeking comment.
In a Reuters poll, economists forecast the government will borrow a record 16 trillion Indian rupees in the fiscal year to March 2024 on higher infrastructure spending.
The poll also suggested that the government would bring the budget deficit down to 6.0% of GDP in 2023/24. It aims to reach the target of 4.5% by 2025/26.
The indebtedness of the federal and state governments is as high as 83% of annual gross domestic product (GDP), which is higher than in many other emerging economies. The country’s sovereign credit rating is just one notch above the junk level.
The International Monetary Fund said last month that India needed a more ambitious plan for fiscal consolidation to ensure that debt would be sustainable over the medium term. The government says that its current plan is already sufficient for this work.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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