The government needs more money to combat the corona virus infection. On the other hand, the nationwide lockdown has resulted in a drastic reduction in tax collections. In view of this, the government has decided to increase the limit of borrowing from the market to Rs 4.2 lakh crore during the current financial year. The government has increased the limit of borrowing from the market by more than 50 percent.
This means that in the financial year 2020-21, the government can borrow up to Rs 12 lakh crore from the market. The central government's move will have a significant impact on the fiscal deficit. Finance Minister Nirmala Sitharaman, while presenting the Union Budget for the year 2020-21, had fixed the borrowing limit of Rs 7.80 lakh crore from the market. In FY 2019-20, this limit was Rs 7.1 lakh crore.
In the statement released on Friday by the Finance Ministry, "Gross market borrowing is estimated to be Rs 12 lakh crore in the financial year 2020-21. It was kept at Rs 7.80 lakh crore in the budget estimate for the financial year 2020-21.
In the Union Budget presented by Sitharaman on February 1, 2020, the target was to keep the fiscal deficit at 3.5 percent of GDP in the current financial year. Presently, given the increase in the borrowing limit and the huge reduction in revenue, it is difficult to estimate how much the fiscal deficit will increase.
