By – Murthy Nagarajan, Head-Fixed Income, Tata Asset Management
The Net borrowing for next year is budgeted at Rs 11.70 lakh crores and Gross borrowing of Rs 17.2 Lakh crores. The Government is targeting a fiscal deficit of 4.3 percent of GDP. The government has shifted the goal post from fiscal deficit reduction of Debt to GDP ratio. Government has taken a prudent path as reduction of fiscal deficit can led to growth slowdown as global environment is not conductive to growth. Government is again doing the hard lifting with capital expenditure increased from Rs 11 to Rs 12.20 Lakh crores for the next financial year.
The Debt market expected net borrowing of Rs 11.5 Lakhs Crores and Gross borrowing of Rs 17 Lakh Crores assuming a fiscal deficit of 4.2 percent. The Debt market may open slightly negative due to higher borrowing programme.