The Indian government is considering investing an additional 2 trillion rupees ($26 billion) in the fiscal year 2022/23 to protect consumers from rising costs and combat multi-year high inflation, according to report quoting information from unnamed government officials.
The additional measures will more than treble the 1 trillion rupee impact to government revenues that tax cuts on gasoline and diesel announced by the finance minister on Saturday, according to both sources as quoted in the reports.
In April, retail inflation in India reached an eight-year high, while wholesale inflation reached at least a 17-year high, providing a big challenge for Prime Minister Narendra Modi's government ahead of state assembly elections this year.
"We are fully focussed on bringing down inflation. The impact of Ukraine crisis was worse than anyone's imagination," one official, who did not want to be named, said.
According to the two officials, the government expects that another 500 billion Indian rupees will be required to support fertilisers, up from the present estimate of 2.15 trillion rupees.
If crude oil prices continue to climb, the government may implement another round of tax cuts on gasoline and diesel, costing the government an additional 1 trillion to 1.5 trillion rupees in the fiscal year that began on April 1, according to the second official.
According to one of the officials, the government may need to borrow more funds from the market to support these measures, which could result in a deviation from the 6.4 per cent of GDP deficit target for 2022-23.
The amount of borrowing or fiscal slippage, according to the official, is dependent on how much money is diverted from the budget over the fiscal year.
According to budget announcements made in February, the Indian government aims to borrow a record 14.31 trillion rupees this fiscal year.
The additional borrowing, according to the second official, will not affect the 8.45 trillion rupee borrowing planned for April-September and might be done in January-March 2023.
(Source:www.thewire.in)
The additional measures will more than treble the 1 trillion rupee impact to government revenues that tax cuts on gasoline and diesel announced by the finance minister on Saturday, according to both sources as quoted in the reports.
In April, retail inflation in India reached an eight-year high, while wholesale inflation reached at least a 17-year high, providing a big challenge for Prime Minister Narendra Modi's government ahead of state assembly elections this year.
"We are fully focussed on bringing down inflation. The impact of Ukraine crisis was worse than anyone's imagination," one official, who did not want to be named, said.
According to the two officials, the government expects that another 500 billion Indian rupees will be required to support fertilisers, up from the present estimate of 2.15 trillion rupees.
If crude oil prices continue to climb, the government may implement another round of tax cuts on gasoline and diesel, costing the government an additional 1 trillion to 1.5 trillion rupees in the fiscal year that began on April 1, according to the second official.
According to one of the officials, the government may need to borrow more funds from the market to support these measures, which could result in a deviation from the 6.4 per cent of GDP deficit target for 2022-23.
The amount of borrowing or fiscal slippage, according to the official, is dependent on how much money is diverted from the budget over the fiscal year.
According to budget announcements made in February, the Indian government aims to borrow a record 14.31 trillion rupees this fiscal year.
The additional borrowing, according to the second official, will not affect the 8.45 trillion rupee borrowing planned for April-September and might be done in January-March 2023.
(Source:www.thewire.in)