The Indian government has slashed its borrowing for FY23 by Rs 10,000 crore, partly helped by buoyant tax collections which would be adequate to support Rs 44,762 crore of extra expense on free ration distribution.

The government is also expecting gains from the windfall profit tax on oil that was levied from 1 July.

The borrowing plan for FY23 is thus cut to Rs 14.21 lakh crore from Rs 14.31, despite higher spending on food and fertiliser due to the Ukraine crisis.

The finance ministry said the government plans to borrow Rs 5.92 lakh crore in October-March period, including from issuance of its maiden Sovereign Green Bonds of Rs 16,000 crore. In the first half of the fiscal year ending 30 September, the government has borrowed Rs 8.29 lakh crore.

In the quarter ending December the government plans to raise Rs 2.86 lakh crore via treasure bills.

The gross market borrowing of Rs 5.76 lakh crore (40.5%) would be completed through 20 weekly auctions.

The government said the October-March borrowing will be done through 2, 5, 7, 10, 14, 30 and 40 years tenure bonds.

To take care of temporary mismatches in government accounts, the RBI has fixed the Ways and Mean Advances (WMA) limit for H2 of 2022-23 at Rs 50,000 crore.

India’s current account deficit (CAD), a key indicator of the balance of payment position, widened to 2.8% of GDP at $23.9 billion in the first quarter of the current financial year, mainly due to a higher trade deficit.

It stood at $13.4 billion (1.5% of GDP) in January-March 2022 and a surplus of $6.6 billion (0.9% of GDP) in April-June 2021.

The central bank is optimistic CAD will not rise above 3% of GDP in this financial year.

Aditi Nayar, chief economist at ICRA, however, expects the CAD to exceed 3% of GDP. “Based on preliminary trends for July-August 2022, and our expectation for September, we project the current account deficit to widen further to US$35-40 billion in Q2 FY2023, or around 4.2-4.8% of GDP. However, we are cautiously hopeful that the size of the current account deficit will ease appreciably in H2 FY2023, with seasonally stronger exports and softer commodity prices. Nevertheless, we still expect the CAD to exceed 3.0% of GDP in FY2023,” she said.