The government will borrow about Rs 12 lakh crore in the next fiscal at reasonable rates, Economic Affairs Secretary Tarun Bajaj said. The return on investment in government securities is the same as in the current financial year, he said. The government will ensure that there is no shortage of funds if private companies seek a loan by 2021-22, which they plan to take on record debt, he said. In 2020-21, the cost of funding for the government is low because there is sufficient liquidity in the market.
Liberalization of FDI in defense production will attract investment
Despite the government’s massive loan program of Rs 12.80 trillion, the fund’s cost is down 0.8 to 1.0 per cent over the previous financial year. The average return on investment in bonds was 5.82 per cent in the first half of the financial year 2020-21. This is one per cent lower than the average investment income of the previous financial year. For the fiscal year 2019-20, government debt averaged 6.58 per cent. The interest rate (coupon rate) at the recent 10-year Government Bond (G-Sec) auction was at 5.85 per cent. Here and there may be 0.05 to 0.1 percent.
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He said that apart from market debt, there are other options ahead of the government. It includes the National Social Security Fund (NSSF) and multilateral agencies. If the private sector comes along, we will be happy to ensure the availability of funds for them, ”Bajaj said. The government will take a loan of Rs 12.05 crore from the market in 2021-22, which is below the estimate of Rs 12.80 lakh in the current financial year.
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