Centre's borrowings may touch Rs14.8L cr in FY24

Mumbai: The Centre, as well as state governments, are likely to budget for higher market borrowings next fiscal even though the Union Budget may peg a lower-than-expected fiscal deficit at 5.8 per cent of GDP, a report said.

Icra Ratings anticipated that higher redemptions will lead to gross market borrowings of the Centre and states to rise to Rs14.8 lakh crore and Rs 24.4 lakh crore, respectively, in FY24 from Rs 14.1 lakh crore and Rs 22.1 lakh crore, respectively, in FY2023. The agency also said the Centre is expected to peg its FY24 fiscal deficit at 5.8 per cent of the GDP, a healthy moderation from 6.4 per cent of GDP projected for FY23. According to Aditi Nayar, chief economist at the agency, with a global growth slowdown looming large, Budget 2024 needs to focus on sustaining the domestic growth momentum, while at the same time demonstrating a continued commitment towards fiscal consolidation in addition to limiting the rise in market borrowings. She also expects the forthcoming budget enhancing the Central capital expenditure to Rs 8.5-9 lakh crore and targeting a lower fiscal deficit of 5.8 per cent of GDP, aided by lower subsidies.

Despite this, higher redemptions will enlarge the Centre's gross market borrowings to Rs 14.8 lakh crore in FY24 from Rs 14.1 lakh crore in FY23. She said the revenue deficit is expected to fall to Rs 9.5 lakh crore in FY24 from Rs 10.5 lakh crore in FY23, while fiscal deficit may fall only mildly to Rs 17.3 lakh crore from Rs 17.5 lakh crore, respectively, led by higher capex.