Hyderabad: The Union government has adequate cash flow to tide over the economic and health challenges posed by the outbreak of Covid-19 global pandemic which may require additional expenditure for health and also for a stimulus package for the industry, a top official said while announcing the borrowing calendar of the government for the next six months.
As per the borrowing calendar announced on Tuesday, the Union government will borrow Rs 7.8 lakh crore in FY 2020-21 and nearly 63% of it (Rs 4.88 lakh crore) will be borrowed in the first six months (April-September 2020).
“The government is committed to meet its requirements for fighting the Covid-19, whether on account of health issues or on account of protecting the economy and also for providing the necessary stimulus at any point of time,” said economic affairs secretary Atanu Chakraborty.
“The entire borrowing program has been designed in that fashion,” he told reporters.
While presenting the Union Budget, Finance Minister Nirmala Sitharaman had pegged the government’s gross borrowings for FY 2020-21 at Rs 7.8 lakh crore. And despite the increased requirement of funds on account of PM Garib Kalyan scheme and other stimulus measures, the government has retained the gross borrowings at the same level in its borrowing calendar announced today.
Borrowing plan captures economic fallout of Covid-19
In response to a question that why the government has not announced a larger borrowing plan to deal with the economic fallout of the Covid-19 pandemic, Atanu Chakraborty said the borrowing plan announced today takes into account both the planned expenditure and other expenditure which can be anticipated with a certain level of probability, in a reference to the disruptions in the economic activity caused by the Covid-19 pandemic.
“The borrowing plan captures that adequately,” he said while outlining the Union government’s cash management to deal with the unfolding crisis.
Finance minister Nirmala Sitharaman last Thursday announced Rs 1.7 lakh crore PM Garib Kalyan package to insulate nearly two-third of the country’s population by providing them with basic food, fuel and some disposable cash in their hands for the next three months as the country goes into lockdown mode to prevent the community spread of the virus.
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It triggered speculations that the government will have to borrow more money in FY 2020-21 than its budget estimates to fund the Garib Kalyan package and also to provide for another stimulus for economic recovery which may result in a higher fiscal deficit than its budget estimate of Rs 7.96 lakh crore.
Though the government has not announced a larger borrowing plan, but in a note circulated to reporters after the announcement of the borrowing calendar, thefinance ministry said it can tweak the schedule and amount in consultation with the Reserve Bank of India.
Govt committed to protect poor, industry from coronavirus
The top economic affairs officer also reiterated the government’s resolve to meet any exigencies arising out of the outbreak of Covid-19 pandemic that has caused havoc in stock markets across the world and shut down the economic activity in several countries.
The novel coronavirus has so far claimed 35 lives in the country and more than 37,000 across the globe that prompted Prime Minister Narendra Modi to impose a 21-day complete lockdown in the country to break the chain of transmission of this highly contagious virus.
The lockdown measures are expected to have significant adverse impact on the country’s economy which was already in a slowdown mode for the last one year. The GDP growth slipped to 4.7% in the third quarter (October-December period) of FY 2019-20, a six-year low.
Even before the outbreak of Covid-19 pandemic, most of the estimates predicted the country’s GDP growth to slide down to 5% or below in this fiscal, which will be slowest in last 11 years.
(Article by Krishnanand Tripathi)
