India is set to exceed its annual borrowing target after the world’s biggest lockdown decimated the government’s revenue collection goals, people with knowledge of the matter said.
Officials from the finance ministry and the Reserve Bank of India will meet later this month to decide on the amount of borrowings needed beyond the targeted 12 trillion rupees ($163 billion) in the year ending March 31, the people said, asking not to be identified as the discussions were private. Policy makers will also deliberate on options to raise funds including selling debt directly to the central bank, the people said.
Prime Minister Narendra Modi’s administration isn’t keen on slashing spending at a time when the country’s economic outlook is grim. The economy contracted 23.9% in the quarter ended June, the worst on record, after an extended lockdown to control the spread of the virus wiped out activity and dried up tax collections.
The meeting will be scheduled after Sept. 15 because the government will have a clearer visibility of its financial position after advance taxes start flowing in, they added. All these proposals are being discussed and no final decision has been taken. A finance ministry spokesman was not immediately available for a comment.
The government wants to accelerate investments in port, roads and other infrastructure to stimulate the world’s fifth largest economy in the remaining part of the financial year, the people said.