2023 Budget: Center Borrows Record $198 Billion in 2023/24 Fiscal Report


Next fiscal year’s gross borrowing is expected to reach 16 trillion rupees. (File)


The Indian government will borrow a record 16 trillion rupees ($198 billion) in the fiscal year to March 2024, according to a Reuters poll of economists, who said infrastructure spending and fiscal discipline should be its top budget priorities.

The federal government’s gross debt has more than doubled in the past four years as Prime Minister Narendra Modi’s government has spent heavily to protect the economy from the effects of the COVID-19 pandemic and provide relief to the poor.

The February 1 budget will be the last fully-fledged budget before national elections in 2024 and before elections in several major populous states that will be key tests for the ruling Bharatiya Janata Party (BJP).

But a fall in tax revenues and an expected slowdown in economic growth next fiscal year will limit the government’s ability to cut borrowing in the near term.

According to the median forecast of 43 economists, gross borrowing is expected to reach 16.0 trillion rupees next fiscal year, compared to an estimated 14.2 trillion rupees in 2022/23.

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Forecasts were in a narrow range of 14.8 trillion to 17.2 trillion rupees. Even if it’s at the lower end of the range, 2023/2024 gross borrowing would easily be the highest ever. When Modi’s BJP came to power in 2014, the country’s gross annual loan amounted to just 5.92 trillion rupees.

“The main reason why gross borrowing will still be quite high is the repayment burden,” said Dhiraj Nim, an economist at ANZ. “The government has borrowed a lot in recent years to have money for the pandemic, so the repayment burden will now be quite high for a number of years.”

Dhiraj Nim estimated the repayments for 2023/24 at about 4.4 trillion rupees.

While economists in a separate Reuters poll predicted the government to cut the budget deficit to 6.0% of GDP in 2023/2024, it will still be well above the average of 4% to 5% since the 1970s and well beyond away from the target of reaching 4.5% in 2025/26.

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The deficit is more than double what it was before the pandemic. Rising interest rates have increased the burden of repaying the borrowed money.


The International Monetary Fund said last month that India needed a more ambitious fiscal consolidation plan to ensure debt sustainability over the medium term. The government says its current plan is already sufficient for the task.

The debt burden of federal and state governments is equivalent to 83% of annual gross domestic product (GDP), a ratio higher than that of many other emerging economies. The country’s sovereign credit rating is only a notch above the junk level.

“With budget deficit and debt at historic highs, India must carefully balance fiscal discipline against the need to support growth. The government must do the heavy lifting on capex,” said Sujit Kumar, an economist at Union Bank. from India.

Kumar added that infrastructure investment “will be an obvious bias” to spending, but an economic slowdown will reduce tax collection and that will limit the government’s ability to keep capital spending as fast as it has been since 2020/21 .

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The poll also showed that the Indian government’s capital spending would rise to a record Rs 8.85 trillion in the coming fiscal year, about 2.95% of GDP.

But the growth of such spending would likely slow to barely half the pace of the past three years.

India needs a lot of government funding to renew the infrastructure to fulfill its ambition to become an alternative to China as the factory of the world.

When asked what the two most pressing budget priorities should be, only half of respondents, 18 out of 36, said fiscal discipline and infrastructure investment. The other 18 nominees for employment, education, health care or rural development.

The Indian government will cut food and fertilizer subsidies to Rs 3.7 trillion, more than 25% below the level of about Rs 5 trillion budgeted for 2022/23, the poll found.

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