The Central government may need to borrow more to compensate for revenue loss due to a shortfall in tax collection after the excise duty cut on petrol and diesel and customs duty reduction in some raw materials and intermediaries for iron & steel announced on May 21, CNBC-TV18 quoted sources as saying.
"Centre may consider additional borrowing after tax relief measures, and could borrow Rs 1 lakh crore more this FY," the news channel reported citing sources.
Moneycontrol could not independently confirm the news development.
The revenue forgone on fuel excise duty cuts is broadly estimated at around Rs 1 lakh crore, Finance Minister Nirmala Sitharaman had said while announcing the measures on May 22. Meanwhile, the same on customs duty rejig is expected to be around Rs 20,000 crore, according to some reports.
For the Central government, excise duty earnings from the petroleum sector form the bulk of its excise duty collection.
"Government may consider extra borrowing to meet fiscal gap after excise, customs duty relief. By and large, higher borrowing is required to meet revenue loss on tax cuts," said the sources.
Also Read: Explained: Will prices come down more or will they rise again?
The government yesterday also announced that that beneficiaries of the 'Ujjwala' scheme will get a subsidy of Rs 200 per LPG cylinder for consumption up to 12 cylinders a year.
In the announcement, the Centre also waived customs duty on the import of some raw materials, including coking coal and ferronickel, used by the steel industry. The duty on exports of iron ore was hiked up to 50 percent, and a few steel intermediaries to 15 percent.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
