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Government to miss divestment target, borrow Rs 12 lakh crore

Date: 01-10-2020
Subject: Government to miss divestment target, borrow Rs 12 lakh crore
NEW DELHI: The government on Wednesday acknowledged for the first time that it will fall short of the disinvestment target  as it deferred the BPCL bid submission deadline for the fifth time, while retaining the annual borrowing target  at the revised level of Rs 12 lakh crore. 

The Centre had originally budgeted to borrow Rs 7.8 lakh crore from the market during the current financial year but was forced to increase its bond issue programme as revenues dried up in the first quarter due to the coronavirus-induced lockdown. It has already borrowed around Rs 7.7 lakh crore so far this year. 

Economic affairs secretary Tarun Bajaj told reporters that the government has budgeted for a higher spending requirement and lower revenue and will disclose the details at the time of the Budget presentation in February. 

He added that the disinvestment department will try to maximise receipts, with less than Rs 5,700 crore of the Rs 2.1 lakh crore planned for the current year flowing into government coffers so far. The latest delay in the much-touted BPCL sale also points to a further postponement of the Air India divestment. 

At the end of August, fiscal deficit was estimated at 109% of the full-year target of nearly Rs 8 lakh crore, latest data released by the Controller General of Accounts on Wednesday showed. Revenue receipts were badly hit — 18% of annual target, compared to over 30% a year ago — while overall spending was a bit lower at 41% of the Budget estimate. 

The government’s announcement also ends speculation over monetisation of deficit, which was suggested by several economists and also pushed by some finance ministry officials, although the RBI was not keen on it. The weighted cost of borrowing during the first half was 5.8%, the lowest in 15 years. 

The government has left interest rates on small savings schemes such as public provident fund, Kisan Vikas Patras and post office deposits unchanged for the October-December quarter, providing relief to the middle-class hit by falling deposit rates. The move, however, restricts the ability of banks to reduce deposit rates as they compete with these saving schemes. 


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