Govt's borrowing programme not to crowd out private investment: DEA Secretary

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The government will execute the market borrowing programme in the next financial year in a non-disruptive manner without crowding out the private sector, said Economic Affairs Secretary Ajay Seth.

He further said the government is committed to the path of fiscal consolidation and the budget proposes to bring fiscal deficit down to 6.4 per cent of the GDP in the next financial year as against an estimate of 6.9 per cent in 2021-22.

"This number of Rs 6.6 lakh crore net borrowing… the government is committed to it and we will adhere to that. Rs 6.6 lakh crore is a given and we will not exceed that."

”The borrowing would be done in a non-disruptive manner and it would not crowd out the private sector,” Seth told told PTI in an interview.

He also said that the market borrowing could be trimmed if the collection from small savings schemes is higher than anticipated.

"This year we expect to raise about Rs 6 lakh crore. Next year our estimate is that this number may get moderated to Rs 4.25 lakh crore. But if small savings continue to be as attractive as it has been this year, then the collections from small savings would again be around the level of this year and the market borrowing would go down," he said.

The government plans to borrow a record Rs 11.6 lakh crore from the market in 2022-23 to meet its expenditure requirement to prop up the economy hit by the COVID-19 pandemic. This is nearly Rs 2 lakh crore higher than the current year's Budget estimate of Rs 9.7 lakh crore.

Even the gross borrowing for the next financial year will be the highest-ever at Rs 14,95,000 crore as against Rs 12,05,500 crore Budget Estimate (BE) for 2021-22.

However, the gross borrowing has been revised downwards by nearly Rs 2 lakh crore to Rs 10,46,500 crore for the current financial year helped by improvement in revenues.

Gross borrowing includes repayment of past loans. The government raises money from the market to fund its fiscal deficit through dated securities and treasury bills.

As far as retail inflation is concerned, Seth said the government expects that it will remain in the policy band of 4 plus/minus 2 percentage points for the next financial year.

He said there would be a cooling down of global commodity prices as central banks of large countries have started hardening rates.