The Indian government is ready to submit the 2021 Union budget on February 1, 2021. This year, the budget will focus on extra-budgetary borrowing to reduce the fiscal deficit.
♦ Any loan directly obtained by a public institution other than the center is called “extra-budgetary borrowing.” Public institutions borrow under the guidance of the central government. These loans are used to meet government spending needs.
♦ Under this lending norm, the center can be used to fund expenditures while avoiding debt accounting. Therefore, the debt is not calculated when calculating the fiscal deficit.
♦ The debt of the loan is not officially listed on the center, nor is it included in the national fiscal deficit. Therefore, it helps to keep the country’s fiscal deficit within an acceptable range.
♦ The government can raise borrowings by requiring implementing agencies to raise the necessary funds from the market through loans or issuance of bonds.
♦ It is also possible to raise loans through the Public Sector Bank (PSB), which requires public sector banks to provide funding for off-budget expenditures. For example, using loans from the Public Security Bureau to make up for the lack of fertilizer subsidies.
♦ The fiscal deficit in the league budget is the most desired detail. The fiscal deficit is the gap between central government expenditure and revenue. It helps to understand the financial situation of the government. This number has received great attention from global rating agencies.
♦ As a result, the government has always wanted to limit the fiscal deficit to a certain amount. This can be limited by “extra-budgetary borrowing.” There are multiple sources of off-budget borrowing. thereby. Calculating real debt becomes difficult.