India govt to borrow more in H1 to retire old debt, step up spending
Close to a third of the H1 borrowing will be needed to retire old debt and only Rs 2.3 lakh crore will be left for social schemes, interest payments and investment in infrastructure.business Updated: Mar 28, 2017 18:42 IST
The Centre is unlikely to step up investment in infrastructure significantly during the first half of 2017-18, as most of its borrowed funds will have to be spent for retiring old debt.
The finance ministry on Tuesday set the gross market borrowing for the first six months at Rs 3.71 lakh crore or 64% of the full year’s target of Rs 5.8 lakh crore, economic affairs secretary Shaktikanta Das told reporters.
During 2017-18, the government has to repay Rs 1.57 lakh crore to investors as bonds mature and come up for redemption. Of the total redemption, 90% is happening in first half of 2017-18, Das said.
This means close to a third of the borrowing will needed for retiring old debt and only Rs 2.3 lakh crore will be left for expenditure for social schemes, interest payments and investment in infrastructure.
Since tax collections are sluggish in the initial months of the financial year, the government will have little resources left for capital expenditure, which are crucial to drive economic growth.
The first half borrowing will be higher on government bond redemption as well as expenditure needs, he said.
In his Budget speech on February 1, finance minister Arun Jaitley projected a fiscal deficit of 3.2% of GDP for 2017-18 as compared with 3.5% in 2016-17.
The deficit will be financed by gross market borrowing of Rs 5.80 lakh crore. After redemption, the government’s net borrowing will be Rs 4.25 lakh crore.
For transportation sector--rail, roads and shipping--the Budget has provided Rs 2.41 lakh crore in 2017-18.
“This magnitude of investment will spur a huge amount of economic activity across the country and create more job opportunities,” Jaitley had said.
India’s economic growth is projected at 7.1% during 2016-17, as compared with 7.9% in 2015-16.
First Published: Mar 28, 2017 18:42 IST