Budget 2021: Govt pegs gross market borrowing at Rs 12.05 lakh crore for FY22

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The government will borrow Rs 12.05 lakh crore from the market in 2021-22, lower than the Rs 12.80 lakh crore estimated for the current financial year.

According to the Revised Estimate, the gross borrowing for the current financial year was raised to Rs 12.8 lakh crore as against the Budget Estimate of Rs 7.8 lakh crore, registering an increase of 64 percent.

"The gross borrowing from the market for the next year would be around Rs 12 lakh crores. We plan to continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5 percent of GDP by 2025-2026 with a fairly steady decline over the period," Finance Minister Nirmala Sitharaman said while unveiling Budget 2021-22 in Lok Sabha on Monday.

Gross borrowing includes repayments of past loans. Repayment for past loans in the next financial year has been pegged at Rs 2.80 lakh crore. The government raises money from the market to fund its fiscal deficit through dated securities and treasury bills.

As a result, net borrowing would come down to Rs 9.24 lakh crore for the next fiscal, while for the current fiscal it is estimated at Rs 10.52 lakh crore during 2020-21. Hard-pressed for funds to combat rising coronavirus infections, the government in May increased its market borrowing programme for the current financial year by more than 50 percent to Rs 12 lakh crore.

However, in view of the impact of the lockdown on tax collection and the need to garner additional resources to fight the pandemic, the government decided to substantially increase the market borrowing programme for the current fiscal by about 54 percent or Rs 4.2 lakh crore.

"We would need another Rs 80,000 crores for which we would be approaching the markets in these 2 months. To ensure that the economy is given the required push, our BE estimates for expenditure in 2021-2022, are Rs 34.83 lakh crores. This includes Rs 5.54 lakh crores as capital expenditure, an increase of 34.5 percent over the BE figure of 2020-2021," the minister said.

Sitharaman in the 2020-21 Budget had pegged the gross market borrowing – which is also a reflection of fiscal deficit – for the current fiscal at Rs 7.80 lakh crore. The amount was up from Rs 7.1 lakh crore in 2019-20. The Budget has pegged fiscal deficit at 6.8 percent for the next fiscal, down from 9.5 percent of the GDP in the current financial year.

"The fiscal deficit in RE 2020-21 is pegged at 9.5 percent of GDP. We have funded this through Government borrowings, multilateral borrowings, Small Saving Funds and short term borrowings," she said.