Govt frontloads spending in growth hunt
Finance ministry and Reserve Bank of India (RBI) officials will meet on Thursday to thrash out the government borrowing calendar with indications that it would be frontloaded during the first six months ending September, leaving enough money available for private sector borrowings.india Updated: Jul 15, 2009 21:18 IST
Finance ministry and Reserve Bank of India (RBI) officials will meet on Thursday to thrash out the government borrowing calendar with indications that it would be frontloaded during the first six months ending September, leaving enough money available for private sector borrowings.
“The entire amount need not and will not come from complete market borrowing," he said, adding that the government is trying to borrow more directly at this stage. Monetising of debts is not an option that the government is considering,” finance secretary Ashok Chawla said a post-budget interactive session organised by the Confederation of Indian Industry (CII) here.
“Market certainly has appetite for borrowing as there is enough liquidity and therefore it would not upset anything,” Chawla said.
The government also ruled out any rollback of tax cuts which had been earlier offered to various sectors as part of the fiscal stimulus packages.
“The economy is slowly reviving. There are offshoots of recovery but we do not intend to roll back tax cuts given as part of fiscal stimuli in December last year,” Chawla said.
Chawla said the deficit is expected to come down by 1.5 per cent every year amounting to about Rs 90,000 crore. This is a realistic target as expenditure pertaining to areas like the sixth pay commission implementation would be a one time outflow, he added.
The finance minister said on Tuesday, “Fiscal prudence is critical for maintaining a stable balance of payments, moderate interest rates and steady flow of external capital for corporate investment.”
Hari Bhartia, vice president, CII said the budget would help in ensuring that rural India stays afloat and provides the necessary buoyancy to the economy as a whole. As a contributor of almost half of India's GDP, this is a very important objective of the government, he added.