MUMBAI: The government has decided to cancel its Rs 20,000 crore loan scheduled for March 26 after reviewing the cash balance position, the Reserve Bank of India (RBI) said Monday.
This means that the government would borrow Rs 20,000 crore less than the target of Rs 12.8 lakh crore announced in the budget on February 1 for the current fiscal year.
According to the revised issuance calendar issued on February 1, 2021 for securities dated by the Government of India, the next auction is scheduled for March 26, 2021.
“In reviewing the cash balance position, the Indian government has decided to cancel the aforementioned planned auction,” the central bank said in a statement.
According to the revised estimate, the gross loan for the current fiscal year was increased to Rs 12.8 lakh crore as compared to the budget estimate of Rs 7.8 lakh crore which registered an increase of 64 percent.
“The gross loan from the market for the following year (2021-22) would be approximately Rs 12 lakh crore. We intend to continue our path of fiscal consolidation and plan a level of the budget deficit below 4.5 percent of GDP in 2025-2026 with a fairly steady decline over the period, “Treasury Secretary Nirmala Sitharaman had said when announcing Budget for 2021-22.
The government collects money from the market to finance its budget deficit through dated securities and treasury bills.
As a result, the net loan amount for the following would decrease to Rs 9.24 lakh crore for tax purposes, while for the current one it is fiscally estimated at Rs 10.52 lakh crore in 2020-21.
The budget has fixed the budget deficit for the next budget at 6.8 percent, down from 9.5 percent of GDP in the current financial year. The budget deficit in RE 2020-21 is pegged to 9.5 percent of GDP.