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Union Budget 2022: Government unveils record borrowing plan; FY23 bond sales estimated at Rs 15 lakh crore

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Union Budget 2022: Government unveils record borrowing plan; FY23 bond sales estimated at Rs 15 lakh crore

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Union Budget 2022: According to the budget documents, the government is planning to sell bonds worth about Rs 15 trillion ($200 billion) in FY23. Net borrowings for FY23 are estimated at Rs 11.2 trillion.

Union Budget 2022: Government unveils record borrowing plan; FY23 bond sales estimated at Rs 15 lakh crore
The Union Budget 2022, presented by Finance Minister Nirmala Sitharaman on Tuesday, unveils the government's plans to sell record amount of bonds in the financial year 2023.
According to the budget documents, the government is planning to sell bonds worth about Rs 15 trillion ($200 billion) in FY23. Net borrowings for FY23 are estimated at Rs 11.2 trillion.
"As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy," FM Sitharaman said in her Budget speech.
The government has announced Rs 1 lakh crore to assist the states in FY23 "in catalysing overall investments in the economy". These fifty-year interest
free loans are over and above the normal borrowings allowed to the states, said the FM.
The total expenditure in 2022-23 is estimated at Rs 39.45 lakh crore, while the total receipts other than borrowings are estimated at Rs 22.84 lakh crore.
Among the important things to watch out for in a Budget document is government borrowings. It is the loan that the government takes when it falls short of revenue – tax and non-tax – to fund its spending. The government’s annual borrowing programme includes borrowing through the issue of securities like G-secs and Treasury Bills. While the major source of its borrowing is market, it also borrows from small savings funds, state provident funds, etc.
But like any other debt, the government is also on the hook for paying for the public debt with interest. The government promises to pay the initial principal along with interest upon the maturity of the security, though some securities also offer a periodic coupon or interest payments.
Just like other securities, rating agencies also rate these government borrowing instruments.
In the Union Budget 2021 announced in February last year, the government had projected the gross market borrowing at Rs 12.05 lakh crore for the current financial year. While Rs 7.24 lakh crore, 60 percent of the total amount, was to be borrowed in the first half of the year (H1), the rest was planned to be borrowed in the second half (H2).
The government’s effective borrowing in H1 was Rs 7.02 lakh crore. In September, the government issued a statement saying that it planned to borrow the balance Rs 5.03 lakh crore in H2.
“The H2 FY 2021-22 projection also factors requirements for release of balance amount to states on account of back-to-back loan facility in-lieu of GST compensation during the year,” it had said.
 
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