Government's announcement of FY 21 borrowings - Acuité Ratings & Research

Suman Chowdhury, Chief Analytical Officer at Acuité Ratings & Research:

"Given the large economic losses estimated by Acuité Ratings at USD 4.5 billion per day of pan India Covid lockdown, the economic growth projections are very modest for FY21 at best and this will clearly lead to a significant shortfall in both tax and non-tax revenues that can be as high as Rs. 4 lakh Cr. Even though the additional borrowings may address the revenue gaps, the actual fiscal deficit may be further higher due to the proposed stimulus programmes and higher interest costs. While this is expected to put pressure on the gsec yields, we would expect RBI to deploy OMO and other tools of yield management which will be effectively an indirect way for RBI to finance the deficit."

Source : Equity Bulls

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