Over last 24 hours, two key numbers came out - the borrowing calendar for fiscal year 2019 and the GST revenue for the month of February.
The government has cut its borrowing programme by Rs 50,000 crore for Fy19 and more surprisingly government has cut its borrowing target for the first half of FY19 and now will borrow only 50 percent of its total borrowing in the first half.
Impact on Bond market
The yields fell by 30 basis points; that is the impact was better than a quarter percent rate cut by the Reserve Bank of India.
The PSU Banks saw a rally with Nifty PSU bank closing with a gain of almost 3 percent.
Post market hours the government announced it has collected Rs 85,174 crore GST in February a tad less than the January tally.
So now the questions are:
1. With GST taxes still limping at Rs 85,000 cr a month, will the government be able to collect the targeted amount next year of about Rs 13 lakh crore or target of more than Rs 1 lakh crore a month?
2. With the first half borrowing also down to Rs 2.8 lakh crore versus, Rs 3.7 lakh crore last year first half, will the government have enough to spend?
3. Will the economy suffer due to low government stimulus?
4: Will yields stay low in the second half or will they rise due to the pressure of higher government and private sector borrowing, which traditionally picks up post October?
5. Given this lopsided borrowing and subpar tax collections, will gross domestic product (GDP) growth suffer?To discuss all the above developments and impact of that on the economy, CNBC-TV18 spoke to Indranil Sengupta, Economist, Bank of America Merill Lynch, Sachchidanand Shukla, Chief Economist, Mahindra Group.