Budget 2018: India cuts extra market borrowing needs by 60% to $3.1 billion

Budget 2018

India has cut its additional market borrowing requirement by more than half for the financial year ending in March to Rs 200 billion ($3.13 billion), Economics Affairs Secretary S C Garg said on Twitter.

Government has reassessed additional borrowing requirements taking note of revenue receipts and expenditure pattern. Requirement of additional borrowing being reduced from Rs 50000 crore as notified earlier to Rs 20000 crore.

The news sent benchmark 10-year bond yields down over 15 basis points.

Last month, the finance ministry had said that the government is likely to borrow additional Rs 500 billion ($7.79 billion) in 2017/18 fiscal year that ends in March

Economists today suggested a range of measures, including increasing social security pension, to Finance Minister Arun Jaitley as part of pre- budget consultations.

"The amount (for social security pension) has been Rs 200 per month. This is totally unacceptable. There is no reason to keep it so low. So, make it at least Rs 500, I would say even Rs 1,000, if possible and increase the coverage," noted economist Jean Dreze said after the meeting here.

Asked if social security pension is raised it would result in stress on fiscal deficit, he said, "this is peanuts. This is nothing".

He also suggested full-fledged implementation of maternity entitlements. This has been pending for four years.

Former Chief Economic Adviser Arvind Virmani said the government should carry out customs and exim duty reform as the sector has not seen reforms for 10 years.

According to Rathin Roy, member Economic Advisory Council to the Prime Minister, the government is expected to stick to fiscal deficit target.

"I think there is a political commitment (to do this). I reinforced that. I am sure they will. I said that we understand that there is a genuine commitment to maintain the fiscal deficit and revenue deficit targets. Operational constraints may vary but political commitment is there," Roy said.

Besides, some economist also recommended imposition of long term capital gains tax on equity, sources said, adding interest rate also figured during the meeting along with rural distress and job creation.

Even the Reserve Bank of India at several occasion has asked banks to pass on the rate cut quickly through the repo rate reduction to consumers but banks are reluctant to do so for some reason or other.

Besides Jaitley, the meeting was also attended by top finance ministry officials, including Finance Secretary Hasmukh Adhia, Chief Economic Adviser Arvind Subramanian, Expenditure Secretary A N Jha and Financial Services Secretary Rajiv Kumar.

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