Govt to include old off-Budget borrowings in its own books

New Delhi: The Centre could take on some old, off-budget debt on its books in the next budget, continuing with the drive to present a clear picture of its total liabilities.

Borrowings of government institutions HUDCO and NABARD are being looked into, officials told ET.

The government has in the last two budgets cleared large off-budget borrowings, including those of the Food Corporation of India (FCI), and now is keen to disclose, or even pay up, some of these liabilities, subject to availability of fiscal space.


"The objective is to transparently disclose outstanding liabilities of the government for informed assessment," a senior official, privy to the deliberations, told ET. "This would impart greater realism and accuracy in the budgeting process, apart from promoting fiscal rectitude on the part of the government."

The government is examining HUDCO's borrowings of about ₹30,000 crore, which could be taken up in line with the fiscal space in the budget this year.

The off-budget borrowing typically has been through government fully-serviced bonds and loans from the National Small Savings Fund (NSSF) to finance expenditures which traditionally would be financed through a budgetary allocation.

In FY19, HUDCO had raised ₹20,000 crore through bonds--fully serviced by the government--for the ministry of urban affairs.

"Discussions are on the issue and a final call would depend on the available fiscal space," the official said.

The budget for FY20 introduced a statement on extra budgetary resources (EBRs) that disclosed borrowings of agencies that went towards funding government schemes, and whose repayment burden was on the budget schemes that have used EBRs. These include Pradhan Mantri Awas Yojana, Pradhan Mantri Krishi Sinchai Yojana, Swachh Bharat Mission, and the Deen Dayal Upadhyaya Gram Jyoti Yojana. FCI had borrowed ₹4.27 lakh crore from the NSSF in the five years to FY21.

The Centre has, in the previous two budgets, used the additional fiscal space created by robust revenues to clear significant off-budget liabilities. The budget for FY22 ended NSSF loans for food subsidies and development schemes have now been on-boarded on the government budget. Resource allocation through these means was stopped in the budget for FY23, after declining sharply from Rs 1.21 lakh crore in FY21 to Rs 752 crore in the revised estimate for FY22. The idea is to include the old, off-budget borrowings in its own books in a progressive manner, the official said.

"Bringing off-budget debt on the budget will greatly enhance the transparency of budgeting at both the central and state government levels, improving the credibility of the debt figures," said Aditi Nayar, chief economist, ICRA.

The Centre has been nudging the states to bring transparency in their budgets and asked them not to take recourse to off-budget funding.