Lok Sabha Question No. 1747 (UNSTARRED), answered on 2016-11-25
Subject: Internal and External Loans
Ministry: FINANCE
Asked by: MAULANA BADRUDDIN AJMAL

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO. 1747

## TO BE ANSWERED ON FRIDAY, THE NOVEMBER 25, 2016 (AGRAHAYANA 04, 1938 (SAKA)

## Internal and External Loans

## 1747. SHRI BADRUDDIN AJMAL:

Will the Minister of FINANCE (                      ) be pleased to state:

- (a)  the  details  of  the  internal  and  external  loans  taken  by  the  Government  along  with  repayment  made  of  the principal and interest thereto during each of the last three years and the current year;
- (b) whether the Government has assessed the positive and negative effects of such loans/borrowings;
- (c) if so, the details thereof; and
- (d) the measures taken or proposed to be taken to expedite the payment of these loans?

## ANSWER

MINISTER OF STATE IN THE                                                                   (SHRI ARJUN RAM MEGHWAL)

## MINISTRY OF FINANCE

(a):  Amount  of  loans  raised  from  domestic  (through  dated  securities,  Treasury  Bills,  Compensation  and  other bonds, Ways and Means advances and Small savings) and external sources during each of the last three years and Budget Estimates for the current year are as under:

(

` Crore)

| Source of Loans                                                                   | 2013-14   | 2014-15   | 2015-16   | 2016-17 (Budget Estimates)   |
|-----------------------------------------------------------------------------------|-----------|-----------|-----------|------------------------------|
| Internal borrowings                                                               | 39,69,550 | 41,84,662 | 42,80,896 | 48,71,876                    |
| Repayment                                                                         | 34,93,167 | 36,87,099 | 37,14,352 | 43,80,736                    |
| Net Internal borrowings                                                           | 4,76,383  | 4,97,563  | 5,66,544  | 4,91,140                     |
| Interest Paid on borrowings (on outstanding and current year borrowings)          | 3,26,344  | 3,50,464  | 3,91,398  | 4,39,690                     |
| External borrowings                                                               | 25,416    | 33,534    | 36,054    | 44,789                       |
| Repayment                                                                         | 18,124    | 20,601    | 23,305    | 25,695                       |
| Net External borrowings                                                           | 7,292     | 12,933    | 12,749    | 19,094                       |
| Interest Paid on external borrowings (on outstanding and current year borrowings) | 3,880     | 3,766     | 3,925     | 4,058                        |

- (b  &  C):  Yes  Sir,  the  Government  is  assessing  the  positive  and  negative  effects  of  the  borrowings.  Debt  of  the Government  in  a  specific  year  depends  upon  the  shortfall/deficit  of  receipts  over  expenditure.  Borrowing  is  a continuous process to bridge the Revenue and Fiscal deficit of the Government in a financial year. The borrowings may be on account of developmental schemes of the Government or for creation of capital assets. This is a general phenomenon followed even in the advanced economies. In order to minimize the negative impact of the  market borrowings on the financial markets, Government raise higher proportion of budgeted borrowings in the first half of the financial year. India's Government Debt portfolio is characterized by favourable sustainability indicators and right  profile.  Share  of  short  term  debt  is  within  safe  limits  and  stabilized  after  some  rise  between  2005  to  2012. Most of the debt is fixed interest rates which minimizes volatility on the budget and reduce interest rate risk to the Government.
- (d): Repayment of Debt is a scheduled payment and will be paid out on its maturity. Early  repayment  could only  be  done  through  buyback  of  the  securities  which  is  depending  upon  the  availability  of  cash  surplus  in  the system. Government is buying back its securities since 2013-14 in consultation with RBI.

The Central Government has been following a comprehensive strategy to moderate growth in public debt through a policy  of  fiscal  rectitude inter  alia ,  including  recourse  to  lower  cost  borrowings,  phased  introduction  of  active consolidation  of  debt,  emphasise  on  raising  funds  on  concessional  terms  and  from  less  expensive  sources  with longer  maturities,  monitoring  short  term  debt  and  encouraging  non-debt  creating  capital  flows.  The  Central Government  has  also  set  up  a  Public  Debt  Management  Cell  in  order  to  have  a  more  prudent  management  of government debt.

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