The Indian government will borrow a record 16 trillion rupees ($198 billion) in the fiscal year to March 2024, according to a Reuters poll of economists, who said infrastructure spending and fiscal discipline ought to be its highest budget priorities.
The federal government's gross indebtedness has more than doubled in the past four years as Prime Minister Narendra Modi's government has spent heavily to cushion the economy from the effects of the COVID-19 pandemic and to provide relief to the poor.
Gross borrowing next fiscal year is expected to hit 16.0 trillion rupees, up from an estimated 14.2 trillion rupees in 2022/23, according to the median forecast of 43 economists. forecast the government would bring the budget deficit down to 6.0% of GDP in 2023/24, it will still be well above the average of 4% to 5% seen since the 1970s and far from the target of reaching 4.5% by 2025/26.
"With the fiscal deficit and public debt at historical highs, India has to delicately balance fiscal discipline vis-a-vis the need to support growth. The government has to do the heavy lifting on capex," said Sujit Kumar, economist at Union Bank of India. India needs plenty of government funding to overhaul infrastructure to fulfill its ambition of becoming an alternative to China as the world's factory.
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