Terming the proposed issuance of sovereign bonds in overseas markets as the “boldest announcement” of the Budget, FinanceNSE -1.19 % Secretary Subhash Chandra Garg Friday indicated that about Rs 70,000 crore could be mobilised through this route. He said diversification of government resource mobilisation is the only way of leaving more funds for the private sector.
“That’s why this is the boldest announcement which has been made, that is opening up of sovereign bonds for overseas market,” he said at a CII event here.
Finance Minister Nirmala Sitharaman in Budget 2019-20 announced that the government would start raising a part of its gross borrowing programme from external markets in foreign currencies.
She added that India’s sovereign external debt-to-GDP level is among the lowest globally at less than 5 per cent.
“We will raise a part of our borrowing abroad now in foreign currency. It will leave some more domestic saving for the private sector. We raise Rs 7 lakh crore as borrowing. We take it all from the domestic market and so much less is left for the private sector. If I raise about 10 per cent of that, additional Rs 70,000 crore would be left for the private sector,” Garg said.
This will increase supply of money in the domestic market, he said, adding that all of these measures are part of the larger story of opening of the Indian private sector and giving it more investible resources.
“You would find lot of statements in the Budget that the government would now be going more and more in PPP route in sectors which have been practically untouched,” he said.
He further said that Budget sets out a clear goal for the next five years, that is to get to USD 5 trillion economy with lot of quality and equity.
Second thing that has not got attention is opening up of the Indian economy to private sector and the world, he added.
On sticking to the fiscal deficit target, he said, “Fiscal disciple is an article of faith and we will stay the course.”
In the Budget, the government lowered the fiscal deficit target to 3.3 per cent of the GDP for 2019-20 as compared to 3.4 per cent projected in the interim Budget in February.
The Centre has committed to reducing the fiscal deficit — the gap between total expenditure and revenue — to 3 per cent of the gross domestic product (GDP) by 2020-21, and eliminating the primary deficit, as per the Fiscal Responsibility and Budget Management (FRBM) Act.
With regard to liquidity, Garg said it is in surplus at the aggregate level for the last four weeks.
The system on an average is having surplus liquidity of Rs 1 lakh crore since June, he said.
However, he added that there could be funding problems for some NBFCs which is be being addressed by the government.
In a bid to address the stress in the sector, the government proposed that public sector banks would purchase high-rated pooled assets of financially-sound NBFCs, amounting to a total of Rs 1 lakh crore during the current financial year.
For this, the government will provide one-time six months’ partial credit guarantee to public sector banks for first loss of up to 10 per cent.
Urging India Inc to invest in the economy, Garg said the country needs large investment in infrastructure and the time has come for the private sector to look at this.
Corporates need to graduate to looking at infrastructure as an investment class, he added.
With regards to concerns that the disinvestment target for the current fiscal is ambitious, Garg said the target was achieved last year and same will be the case this year as well.
The government aims to raise a record Rs 1.05 lakh crore through disinvestment in 2019-20, up from Rs 85,000 crore raised last fiscal.