Something seems off in the Budget Calculations. Every year we spend more than we earn. We borrow the difference, typically as market debt called Government Securities. The difference between spending and earning is the “fiscal deficit”. We’ve borrowed in past years, and some of that borrowing comes up for redemption at maturity. So if your deficit is Rs. 1000, and then you have some Rs. 200 worth of debt coming up for redemption, then you need to borrow Rs. 1200 – 1000 to pay for the deficit, and Rs. 200 to pay back all that debt that came due. In the government budget note here’s the part where they mention this stuff : That means next year, we have to pay back Rs. 143,594 crores , and the “net” borrowing would be 456,405 cr. The “gross” borrowing is therefore 600,000 cr. Basically in order to make up the deficit, which in this budget is Rs. … (Read On…)
[via Capital Mind]
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