The tax reduction on petrol and diesel will lead to revenue loss of around Rs 1 lakh crore per year for the government.
The government is not planning any additional borrowing and will stick to the borrowing target fixed for the current fiscal year despite sacrificing revenue on account of reduction in duties on petroleum products and other goods, official sources said on Wednesday.
In order to contain rising inflation, the government last week reduced excise duty on petrol by a record Rs 8 per litre and that on diesel by Rs 6 to give relief to consumers reeling under high fuel prices that have also pushed inflation to a multi-year high.
Besides, it also provided Rs 200 per cylinder subsidy on LPG to about 9 crore beneficiaries of the Pradhan Mantri Ujjwala Yojana.
The tax reduction on petrol and diesel will lead to revenue loss of around Rs 1 lakh crore per year for the government.
In addition to the fertiliser subsidy of Rs 1.05 lakh crore in the Budget (for current fiscal), the government provided Rs 1.10 lakh crore to further cushion farmers from the price increase due to the shortage of fertilisers.
It was feared that these sops may prompt the government to resort to additional borrowing to meet the fiscal deficit target of 6.4 per cent of the GDP.
However, official sources said that the government does not intend to resort to additional borrowing at the moment to make up for the duty loss.
The government will stick to its borrowing calender planned for the current fiscal.
The government in the Budget had set a gross market borrowing target of Rs 14.31 lakh crore for the current financial year.
Of this, Rs 8.45 lakh crore is estimated to be borrowed in the first half or April-September period.
As per the Union Budget document, the gross market borrowing through dated securities for 2022-23 will be Rs 14,95,000 crore. Taking into account the switch operations conducted on January 28, 2022, the gross market borrowing through dated securities for 2022-23 is expected at Rs 14,31,352 crore. The gross borrowing for 2021-22 was Rs 12,05,500 crore.
Based on its borrowing programme, the government had pegged fiscal deficit of 6.4 per cent of the GDP.
In her Budget speech on February 1, finance minister Nirmala Sitharaman had said the fiscal deficit in 2022-23 is estimated at 6.4 per cent of GDP, which is consistent with the broad path of fiscal consolidation announced by her last year to reach a fiscal deficit level below 4.5 per cent by 2025-26.
"While setting the fiscal deficit level in 2022-23, I am conscious of the need to nurture growth, through public investment, to become stronger and sustainable," she had said.