Union Budget 2024 | FAQs: From whom does the government borrow?

Finance Minister Nirmala Sitharaman will present the Union Budget on July 23, having already presented an Interim Budget ahead of the Lok Sabha elections. In light of the upcoming Budget, we take a look at some of the terms associated with the exercise.

What is government borrowing?

The government borrows through the issue of government securities called G-secs and Treasury Bills. It is a loan taken by the government that falls under capital receipts in the Budget document. Whenever the tax and non-tax revenue falls short to finance the government's spending, the government announces an annual borrowing programme in the Budget every year.

Where does the govt borrow from?

It borrows from the market, small savings funds, state provident funds, external assistance and short-term borrowings. Market borrowing, however, is the major source to finance the fiscal deficit.

Does borrowing have an adverse impact on the economy?

It has two kinds of impact. One, if the government borrows more from the market, it implies that it has left very little space for the private sector and corporates to access the market.

Secondly, large govt borrowing shoots up the interest rates for all other borrowers in the market, in turn, it increases the debt repayment burden of the government and also pushes up the rate of investment in the economy which in turn leads to slowing economic growth.

Union Budget 2024 | Making a record for any Finance Minister, Nirmala Sitharaman will be presenting her 7th Union Budget on July 23, 2024 under the Modi 3.0 government. While inflation has burnt a hole in the pockets of 'aam janata', will this Budget spell relief for Indians? Track the latest coverage, live news, in-depth opinions, and analysis only on Deccan Herald. Also follow us on WhatsApp, LinkedIn, X, Facebook, YouTube, and Instagram.