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Union Government to borrow 4.34 trillion in H2 as planned in May.

The Economists world over (India being not an exception) advocate inter alia, the Government expenditure so as to boost up the demand consumption and to contain the sagging economy. This in turn, helps boost the GDP of the country. Here is the good news for India as the GOI is in a heavy borrowing mood, driven by the pandemic compulsions  and to spend the same on both capital and other revenue expenditures and to heighten the consumption, improve liquidity, more money in the hands of the people to spend thereby providing more employment opportunities.

Of the estimated ₹12 trillion borrowing for the full year, the government has already borrowed ₹7.66 lakh crores, which accounts for 63.8% of the target. With the economy opening up from June, there has been an improvement in revenue

The central government on Wednesday said it will borrow ₹4.34 trillion in the second half of the fiscal, sticking to its ₹12 trillion borrowing plan for the whole year as decided in May. State net borrowing ceiling for 2020-21 is ₹6.41 lakh core (3% of GSDP)

Economic affairs secretary Tarun Bajaj, at a briefing, said the borrowing target was raised to ₹12 trillion in May from the originally budgeted figure of ₹7.6 trillion keeping in mind the economic fallout of the covid-19 pandemic and the decision was to stick to this as per current estimates.

Bajaj said of the estimated ₹12 trillion borrowing for the full year, the government has already borrowed ₹7.66 lakh crores, which accounts for 63.8% of the target.

With the opening up of the economy from June, there has been an improvement in revenue and the government has done some expenditure prioritisation. “We have decided to continue with the same figure of ₹12 trillion for the total year. Which means our borrowing for second would be ₹4.34 lakh crore or 36.1% of the 12 trillion to be borrowed for whole year,” Bajaj added.

The government clearly does not wish to crowd out private sector which might need to borrow as they continue to recover from the impact of covid-19 in the third and fourth quarters.

Record current account balance surplus… India’s current account balance, the value of exports and imports of both goods and services, ended in a record surplus of $19.8 billion, or 3.9% of GDP, during the quarter ended June, exceeding the expectations of economists, as merchandise trade contracted with a slump in crude oil consumption due to the lockdown, and income from services stayed stable. The surplus compares with a deficit of $15 billion, or 2.1% of GDP, a year earlier, RBI data showed. 

These are all positive inputs for the Economy as a whole and would  of course, impact the Bourses in a big way in the days to come.

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