New Delhi: Central government is planning to borrow gross It will raise Rs 14.13 trillion from bond markets in 2024-25 to meet its fiscal deficit, according to the interim budget for FY 2025 presented in Parliament on Thursday.
The government, which has reiterated its commitment to continued fiscal consolidation, has set the fiscal deficit target for FY20 at 5.1% of GDP.
At the net level, which does not include repayment of past loans, the Center will borrow 11.75 trillion.
“India’s surprisingly low fiscal deficit target of 5.1% of GDP for FY2025 will have a positive initial reaction in the bond market, potentially pushing bond yields lower. This unexpected development could create a short-term rally. The impact on corporate bonds will likely depend on how bond traders interpret it and also on system liquidity, said Venkatakrishnan Srinivasan, managing partner at financial advisory firm Rockfort Fincap LLP.
Gross borrowing target for FY25 is lower than Budget Estimate for FY24 15.43 trillion. In response, the 10-year benchmark government bond yield fell to 7.04% from 7.14% on Wednesday, although concerns remain that the government could announce a higher borrowing target in the full budget for the next fiscal year after the general elections, likely in April. Is. -May.
Fiscal deficit is the difference between the income and expenditure of the government.
Higher fiscal deficit leads to higher debt burden and higher spending on debt service, which could hurt the economy and risk devaluing the currency while crowding out private investment.
In her budget speech, Finance Minister Nirmala Sitharaman announced FY24 revised estimates for total receipts 27.56 trillion, and expenditure 44.90 trillion.
The total receipts estimated in the FY24 budget were 27.16 trillion, and expenditure 45.03 trillion.
The Budget Estimates for FY25 are at Total Receipts 30.80 trillion, and the total expenditure 47.66 trillion.
With the help of larger revenues from asset sales and dividends, and coupled with lower market borrowings, the government is likely to meet the fiscal deficit target of 5.1% of GDP for FY2015, which is lower than FY2014. Revised for is down by 5.8%.
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Published: 01 February 2024, 02:36 PM IST