FinMin, RBI meeting Tuesday to decide the first half loan plan for fiscal year 21
NEW DELHI: And RBI will hold a meeting on Tuesday to decide on the government's loan plan for the first half of 2020-21 amid the shutdown to contain the spread of the coronavirus.
According to sources, the government would resort to the anticipated burden of its loan plan to meet the challenges posed by COVID-19 in the economy.
The meeting between the Ministry of Finance and Reserve Bank of India (RBI) will be held via video conference for the first time, as there is a blockade across the country, the sources said.
After the meeting, the dated government securities issue loan schedule and short-term documents will be announced in the afternoon.
According to the Budget, the government plans to borrow Rs 5.36 lakh crore from the market in 2020-21, higher than the estimated Rs 4.99 lakh crore for the current financial year ending March 2020.
The gross loan would be Rs 7.8 lakh crore for the next financial year compared to the estimated Rs 7.1 lakh crore for the current financial year.
Gross debt includes repayments of past loans.
Repayment of past loans in the next fiscal year has been set at Rs 2.35 lakh crore.
In presenting the Budget for 2020-21, the Minister of Finance had said: Net market loans for the year 2019-20 would be Rs 4.99 lakh crore and for the year 2020-21 it would be Rs 5.36 lakh crore.
A good portion of the loans for the 2020-21 financial year would go to government capital expenditures that have expanded by more than 21 percent.
As I mentioned earlier, another approximately Rs 22 billion has been allocated to capital to finance certain specific companies, which would take advantage of it and provide much-needed long-term financing for the infrastructure sector. That should spur growth impulses in the economy, she had said.
The government raises funds from the market to finance its fiscal deficit through past due securities and treasury bills.
The Budget has set the fiscal deficit at 3.5 percent for the next fiscal year, below 3.8 percent of GDP in the current fiscal year.
The government had previously estimated that the fiscal deficit was 3.3% of GDP for the current tax, but due to the lack of income, the Center had to increase it and use the 'escape clause' in the Fiscal Responsibility Law and Budget Management (FRBM).
The 'escape clause' allows the government to meet its fiscal deficit target by 0.5 percentage points at times of severe stress on the economy, including periods of structural change and those in which growth falls sharply.