As the Centre announced tax cuts on petrol and diesel and additional gas subsidy on May 21, the Indian economy is ready to take a hit of Rs 1 lakh crores.
According to a Bloomberg report, the country will borrow the entire Rs 1 lakh crores that the government will forgo in its political gambit to control the rising inflation.
For instance, the rising debt load will shock India’s bond market, where yields on benchmark 10-year notes have surged over the past month.
According to a Reuters report, if crude oil continues to rise, the government is likely to announce another round of petrol and diesel cuts. This would mean India could bear an added hit of 1-1.5 lakh crores in the fiscal year 2022-23.
Speaking to Reuters, an official who did not want to be named said, “The additional sums that the government may borrow from the market to fund these measures could mean a slippage from its deficit target of 6.4% of the GDP (Gross Domestic Product) for the financial year 2022-23.” India’s retail inflation rose to an eight-year high in April this year.