Monitoring Desk
ISLAMABAD/BENGALURU: The Indian government would borrow a record 16 trillion rupees in the current fiscal year to March 2024, according to a Reuters poll of economists, who cautioned that infrastructure spendings and budgetary discipline have to be its highest budget priorities.
The federal government’s gross indebtedness is more than doubled in the previous four years as Indian Prime Minister Narendra Modi‘s government has spent heavily to cushion the economy from the effect of the Covid pandemic and to provide relief to the poor.
Indian government’s record borrowing
The February 1 budget would be the full-fledged one before the national elections in 2024 and before the polls in many large populous states that could be critical tests for the ruling Bharatiya Janata Party.
But the fall in tax revenue and expected slowing economic growth next fiscal year could limit the Indian government’s ability to cut borrowing in the near term.
According to the medium forecast of 43 economists, the gross borrowing next fiscal year was expected to hit 16.0 trillion rupees, up from the estimated 14.2 trillion rupees in 2022-23.
Predictions ranged between 14.8 trillion to 17.2 trillion rupees. If it is at a lower end of the spectrum, 2023-2024 gross borrowing could easily be the highest on the record. When the BJP swept to power in 2014, India’s gross annual borrowing was just 5.92 trillion rupees.
Dhiraj Nim, the economist at ANZ, said that a critical reason gross borrowing will still be high is the repayment burden.
“The Indiana government borrowed a lot in the previous few years to have funds for the pandemic, which means the repayment burden could now be quite elevated for several years.”
