The central government is sticking to its gross borrowing target of ₹14.31 trillion for the current financial year despite revenue hit on account of reduction in excise duty on petroleum products and higher subsidy burden owing to food and fertiliser, a top government source said, reported Business Standard.
There is no proposal as of now to revise the medium-term inflation target; that the government will pull out money from the Consolidated Fund of India to ensure that its capital expenditure commitments are met; and that the plan to privatise some state-owned banks is very much alive and could happen this year, the source said.
The person said talks were going on with Russia on trading through the rupee-ruble route, and that the planned rationalisation of goods and services tax (GST) rates might hit some speed bumps due to inflation overhang.
“Currently, we do not see the need to borrow additional sums from the markets. We are sticking to our FY23 borrowing plan,” the source said.
When asked whether the FY23 fiscal deficit target of 6.4 per cent of gross domestic product (GDP) would be met, the source said the government would have to find a way to balance the books.
The Centre plans to borrow ₹8.45 trillion from the bond markets in the first half (April-September) of FY23. This will be around 59 per cent of a lowered full-year gross borrowing target of ₹14.31 trillion.
The revenue foregone due to the recent excise duty cuts on petrol and diesel will be around ₹85,000 crore in FY23, and all of it will be borne by the Centre as the cut is on road & infrastructure cess. The Centre will bear an additional ₹1.10 trillion in fertiliser subsidy as commodity prices have spiked due to Russia’s invasion of Ukraine.
The source said there would be no compromise on various heads even in view of the recent hits on the Centre’s budget.
Giving an example, the person said while the revised estimates of road and infrastructure cess collected through duties on petrol and diesel was ₹2.03 trillion in FY22, the Centre released ₹2.47 trillion, with the remaining amount coming from the Consolidated Fund of India.
Similarly, though the FY23 BE under the same heading is ₹1.38 trillion (and it will be even lesser as the ₹85,000 crore revenue foregone will be under this item), the Centre plans to utilise ₹2.95 trillion under this cess, with the amount again coming from the Consolidated Fund.
The person also said that the Centre was still looking to privatise some state-owned banks this year, even though the required legislative changes had not yet been brought in Parliament. The official did not name any possible candidate for such a move.