Market Borrowings of Centre, States Seen At Rs 24.4 Lakh Crore In FY2024: ICRA

edited by: Mohammad Haris

Last Update: January 12, 2023, 2:56 pm IST

ICRA expects the government's net tax receipts to exceed the budgeted amount by Rs 2.1 lakh crore in FY2023.  (Photo: Reuters)

ICRA expects the government’s net tax receipts to exceed the budgeted amount by Rs 2.1 lakh crore in FY2023. (Photo: Reuters)

Fiscal deficit as a proportion of GDP is expected to come down to 5.8 per cent from 6.4 per cent in FY24

According to a report by rating agency ICRA, the government will keep its fiscal deficit at 5.8 per cent of GDP in the Budget Estimate (BE) for FY2024, a healthy moderation from 6.4 per cent of GDP estimated for FY2023. With higher redemptions, the report expects gross market borrowings of government and general government to rise to Rs 14.8 lakh crore and Rs 24.4 lakh crore in FY24, respectively, from Rs 14.1 lakh crore and Rs 22.1 lakh crore in FY2024. crore is Rs. , in FY2023.

ICRA Chief Economist and Head (Research and Outreach) Aditi Nair said, “With the global growth slowdown looming large, the Union Budget for FY24 needs to focus on maintaining the domestic growth momentum, with At the same time, a continued commitment must be demonstrated to fiscal consolidation in addition to limiting the increase in market borrowings.”

He said the Union Budget for FY24 could appreciably increase the government’s capital expenditure to Rs 8.5-9 lakh crore and target a lower fiscal deficit of 5.8 per cent of GDP, which would welcome the proposed low subsidies. Aided by cushion. Despite this, higher redemptions will increase its gross dated market borrowings to Rs 14.8 lakh crore in FY24 from Rs 14.1 lakh crore in FY23.

Aided by strong direct tax collections and GST inflows, ICRA expects the government’s net tax receipts to exceed the budgeted amount by Rs 2.1 lakh crore in FY2023. This, combined with expenditure savings of Rs 1 lakh crore along the lines seen in the last 5-6 years, is expected to offset the large net cash outlay and shortfall announced in the 1st Supplementary Demands for Grants. Non-tax revenue and disinvestment receipts.

The report expects the government’s fiscal deficit to touch Rs 17.5 lakh crore in FY2023, higher than the budgeted amount of Rs 16.6 lakh crore. However, the larger-than-expected fiscal deficit will remain at the budgeted target of 6.4 per cent of GDP.

ICRA estimates that the government’s Gross Tax Revenue (GTR) in FY2024 will expand by Rs 34 lakh crore, 9.4 per cent (over the estimated level in FY2023), with an increase in direct taxes likely to increase indirect taxes Is. The latter is expected to be constrained to revert customs duty collection and excise duty on auto fuel to pre-COVID-19 levels.

The projected increase in GTR is similar to ICRA’s forecast of nominal GDP growth of 10 per cent for FY2024, indicating a tax buoyancy of about 1, in line with the decadal average observed during FY2010-19.

The rating agency has projected the Indian government to target a double-digit growth in capital expenditure of Rs 8.5-9 lakh crore in FY2024 relative to the level of Rs 7.5 lakh crore expected in FY2023. In contrast, revenue expenditure is expected to grow at a relatively lower rate of around 3 per cent, buoyed by lower expenditure on account of food and fertilizer subsidies.

While ICRA expects the government’s revenue deficit to widen to Rs 9.5 lakh crore in FY2024 from Rs 10.5 lakh crore in FY2023, the fiscal deficit is expected to decline marginally to Rs 17.3 lakh crore from Rs 17.5 lakh crore in FY20, respectively. Crores will be Rs. Nevertheless, as a proportion of GDP, the fiscal deficit is expected to decline from 6.4 per cent to 5.8 per cent, respectively.

Nair said, “The quality of spending and the fiscal deficit are expected to improve in FY2024 as compared to FY2020, after the Indian government expected a relatively sharp increase in capital expenditure. However, the share of interest payments in total expenditure will remain high at around 24-25 per cent, underscoring the need to limit borrowing going forward, given the significant increase in debt outstanding of the Government of India in the post-Covid period.”

ICRA expects the government to keep its net market borrowings at Rs 10.4 lakh crore in FY2024, down from Rs 10.9 lakh crore in FY23. With higher redemptions, its gross market borrowings rose from Rs 14.1 lakh crore to Rs 14.8 lakh crore, respectively.

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