Budget 2019 : Borrowings/ Government Debt

The Union Budget had the following to say on the government debt-

• India s sovereign external debt to GDP is less than 5%.
• It is among the lowest globally among major economies.
• The Indian Government needs to borrow some money from the markets to fund its spending programs. This amount, when borrowed on the domestic market, constraints credit supply for other borrowers.
• The government may introduce an Indian sovereign bond in the global markets which can then be used to mop up at least USD 10 billion (about Rs 70,000 crore).
• The Government has now decided to borrow from abroad in external markets and in external currencies. This will ease the supply glut in the domestic market.
• This will also have a beneficial impact on the demand situation for government securities in the domestic market and also help to reduce the borrowing costs for Indian companies.
• The government has made no changes to its gross borrowing program. This has cheered the bond markets who have appreciated the government s resolve to stick to fiscal discipline.

What is the Soverign Debt?

The Sovereign debt is a debt held by the central government of a nation. It is issued by the national government in a foreign currency to finance the issuing country’s cash needs, mainly to fund infrastructure projects. It is also referred to as government debt, public debt, and national debt.