Home Tags Borrowings
India’s corporate borrowers now risk getting crowded out as the Modi government steps up debt issuance following the coronavirus crisis.
The increase in annual borrowings to Rs 12 lakh crore from Rs 7.8 lakh crore has been necessitated by steep fall in revenue collections & unscheduled spending.
Govt says full year borrowing will increase to Rs 12 lakh crore from the initially budgeted Rs 7.8 lakh crore on account of the coronavirus pandemic.
According to The Wall Street Journal, the sum is more than five times the previous quarterly record, set at the height of the 2008 financial crisis.
States finished the fiscal year to March 2019 with a combined fiscal deficit of 2.9 per cent, 34 basis points worse than what was budgeted for.
Cost of borrowing will go up if foreign lenders mistrust India’s budget estimates, off-budget borrowing or fear payment could be delayed to achieve annual targets.
Potential for reforms after Modi’s comprehensive win is likely to improve flow of foreign capital to corporates & that's good news for credit markets.
World Bank assistance to India peaked in fiscal year 2010 at $9.3 billion, and help has been provided across sectors like road and power infrastructure, agriculture, health etc.
Global funds see more pain for India’s debt as budget math weighs
Modi govt may trim its borrowings for second time this year but it is not likely to lift the pall over the bond market.
12Page 1 of 2