The government is expected to wait till January for announcing its higher borrowing requirement for the financial year, instead of incorporating it in the second half loan calendar to be issued later in September.
While the markets expect the government to overshoot the borrowing target this year, the decision might send a wrong signal at a time when the economy is facing issues such as a high fiscal deficit and sticky inflation.
The Reserve Bank of India (RBI) and the government will put out a borrowing calendar for the second half of the current financial year in the last week of September. The calendar could well be within the budgeted targets, so as to avoid any nasty surprises to the market as of now.
"The government's borrowing will definitely overshoot in the second half. Some of the oil companies are saying they are losing Rs 6 per litre in their petrol sales. The government is yet to rationalise energy prices," said Rupe Rege, chief economist at Bank of Baroda.
Data released recently showed India's fiscal deficit for the first quarter of current financial year had reached Rs 2.64 lakh crore, more than half the full year target.
The budget aims to contain the deficit to 5.1 per cent of gross domestic product this financial year. Rege added the ballooning burden of fuel and food subsidies in the current year implied the government would not be able to meet its fiscal targets.
The government had planned to front-load this year's borrowing by raising 65 per cent or Rs 3.7 lakh crore in the first half
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