Thegovernment’s gross indebtedness has more than doubled in the past four years. (File)

New Delhi:

India’s government is likely to keep its gross market borrowing below 16 trillion rupees ($196 billion) for 2023/24 as it does not want to destabilise the bond market with any negative surprises, two sources close to the deliberations said.

“Feedback from the market participants is that a borrowing of 15.5-16 trillion rupees can be absorbed well in the next financial year,” one of the officials told Reuters.

The second official said that based on the discussions held so far within the government, the view has emerged that borrowing should be consistent with the market’s expectation.

The government has so far raised 12.93 trillion rupees up to Jan. 27, which is 91% of the overall gross borrowing target of 14.21 trillion rupees in the 2022/23 fiscal year which ends on March 31.

Traders are waiting for the Union budget on Feb. 1, with the government’s fiscal consolidation path and its borrowing calendar for fiscal year 2024 set to be the next market-moving trigger.

The government’s gross indebtedness has more than doubled in the past four years as Prime Minister Narendra Modi’s government has spent heavily to cushion the economy from the effects of the COVID-19 pandemic and to provide relief to the poor.

India’s finance ministry did not immediately reply to an email and a message seeking comments.

In a Reuters poll, economists forecast the government will borrow a record 16 trillion Indian rupees in the fiscal year to March 2024 on higher infrastructure spending.

The poll also suggested that the government would bring the budget deficit down to 6.0% of GDP in 2023/24. It aims to reach a target of 4.5% by 2025/26.

The indebtedness of federal and state governments is equal to 83% of annual gross domestic product (GDP), a ratio higher than that of many other emerging economies. The country’s sovereign credit rating is just a notch above junk level.

The International Monetary Fund said last month India needed a more ambitious plan for fiscal consolidation to ensure debt would be sustainable in the medium term. The government says its current plan is already enough for the task.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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