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The Reserve Bank of India (RBI) has said that the government has decided to cancel its Rs 20,000 crore borrowing scheduled for March 26, 2021 on review of cash balance position. This means, the government would be borrowing Rs 20,000 crore less than its target of Rs 12.8 lakh crore announced in the Budget on February 1 for the current fiscal. According to the Revised Estimate, the gross borrowing for the current financial year was raised to Rs 12.8 lakh crore as against the Budget Estimate of Rs 7.8 lakh crore, registering an increase of 64 per cent.

In a Budget for 2021-22, Finance Minister Nirmala Sitharaman had said ‘the gross borrowing from the market for the next year (2021-22) would be around Rs 12 lakh crores. We plan to continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5 per cent of GDP by 2025-2026 with a fairly steady decline over the period.’

The government raises money from the market to fund its fiscal deficit through dated securities and treasury bills. As a result, net borrowing would come down to Rs 9.24 lakh crore for the next fiscal, while for the current fiscal it is estimated at Rs 10.52 lakh crore during 2020-21. The Budget has pegged fiscal deficit at 6.8 per cent for the next fiscal, down from 9.5 per cent of the GDP in the current financial year. The fiscal deficit in RE 2020-21 is pegged at 9.5 per cent of GDP.