The central government can borrow of one lakh crore rupees from the market to compensate for the loss due to reduction in tax on petrol and diesel .
The government is expected to suffer the same loss due to the reduction in tax on fuel and the entire amount will be raised from the market. People related to the matter have given this information.
The rising debt is also expected to have a negative impact on India’s bond market.
Tax cut was done yesterday to give relief from inflation
Saturday, the central government had reduced the excise duty on petrol and diesel. The duty on petrol has been reduced by Rs 8 and on diesel by Rs 6 per liter.
With this, the price of petrol in the country has come down by Rs 9.5 per liter and that of diesel by Rs 7 per liter.
An announcement was also made to give a subsidy of Rs 200 per cylinder to more than nine crore beneficiaries of Pradhan Mantri Ujjwala Yojana .
Announcement to increase fertilizer subsidy to farmers
The government has also announced an additional fertilizer subsidy of Rs 1.05 lakh to the farmers. Apart from this, customs duty on raw material and middlemen for plastic products with high import dependence has also been reduced.
That’s why the government will have to take borrow from the market.
People with knowledge of the matter told Bloomberg that much of the revenue earned by the central government from the increase in the collection of Goods and Service Tax (GST) and personal income tax will go towards food subsidies to the poor and fertilizer subsidies to farmers.
In such a situation, the government will have to borrow from the market to compensate for the loss in excise duty on petrol and diesel. A spokesperson for the Finance Ministry is yet to comment.
Central government will take record borrow this year
This loss in revenue to the government is going to happen at a time when the government is going to take a record borrow this year. The government has set a target of raising debt of Rs 14.3 lakh crore in this financial year by March 2023. This entire borrow will be taken from banks and insurance companies etc. in Rs.
This rising debt is likely to have a negative impact on India’s bond market, which was on a boom for the past few months.
Government can do additional expenditure of Rs 2 lakh
To keep inflation under control, the government can spend an additional two lakh crore rupees.
An official told international news agency Reuters that the government believes an additional Rs 50,000 crore may be needed for fertilizer subsidies.
Apart from this, if the price of crude oil continues to rise, then the tax on petrol and diesel may be cut again, causing a loss of Rs 1.5 lakh crore.
Inflation rate was at record level in April
Let us tell you that in April, the retail inflation rate in the country was 7.79 percent, which is the highest since September 2014.
This increase in inflation is due to increase in the price of fuel and food items. Food inflation stood at 8.38 per cent in April, while fuel prices are at record highs.
In March, the inflation rate in the country stood at 6.95 percent and food prices increased by 7.68 percent.