The government is expected to come up with a borrowing road map for the second half of the fiscal on Monday amid a raging debate whether it would raise Rs 4.34 lakh crore as planned or a higher sum to foot the burgeoning pandemic bill as tax collections moderate.

Some analysts said the government would wait till the third quarter was over when it would be better able to assess its revenue post the festive season.

Hard-pressed for funds to combat the rising coronavirus infections, the government in May increased its market borrowing for the current financial year by more than 50 per cent to Rs 12 lakh crore. In February, the budget had set a target to borrow Rs 7.80 lakh crore.

Aditi Nayar, principal economist, Icra said: “The government’s net tax revenues, non-tax revenues and disinvestment proceeds will together trail the FY2021 budget estimate by a huge Rs 6 lakh crore.”

“Moreover, expenditure will rise on account of the fiscal support announced under the ‘Aatma Nirbhar Bharat Abhiyan’, and the cash outgo for other items included in the First Supplementary Demand for Grants.”

She said the fiscal deficit would widen to at least Rs 14 lakh crore this fiscal from the budgeted Rs 8 lakh crore. Accordingly, this entails a further expansion in the GoI’s borrowing calendar for the second half of at least Rs 1.1 lakh crore.

Funds Crunch

• Borrowing plan: Rs 4.34 lakh cr
• Why it may be inadequate: Sharp drop in revenue collections. One estimate puts additional borrowing of Rs 1.1 lakh crore
• What can govt do: Can wait till third-quarter ends. Better assessment of revenues after festive season

However, Madan Sabnavis, chief economist of Care Ratings, said: “It is unlikely to be more than Rs 12 lakh crore for the full year….therefore no surprise is expected.”
“The government would wait and watch the situation and take a call at the end of the third quarter of the current fiscal. The Covid-19 pandemic has created uncertainty on the demand spur in the coming months and the government would be cautious to watch out and take a call,” Devendra Kumar Pant, chief economist in India Ratings & Research, said.

Collections suffer

Tax collections have taken a huge hit owing to lockdowns imposed since March to contain the spread of Covid-19. With GDP contracting a record 23.9 per cent in the first quarter, the expectations are that the government may have to announce additional measures to boost demand.