Tag: borrowings

Centre raises borrowing limit for 22 states to meet NPS commitment

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Centre has allowed 22 complying states to borrow an additional amount of ₹69,876 crore to help them meet their National Pension Scheme (NPS) commitments in the current fiscal.

The additional borrowing for states is over and above the ₹6.99 lakh crore of open market borrowings approved by the Centre for FY24.

The total borrowings for states as per the Finance Commission recommendation have been capped at 3% of the state gross domestic product (GDP), or close to ₹8.60 lakh crore, including availing ₹69,370 crore as a negotiated loan.

According to a finance ministry statement, “States allowed an extra borrowing ceiling equivalent to employer and employee share of contribution of its employees as per the guidelines of the National Pension Scheme over and above the normal net borrowing ceiling of 3% of GSDP for FY2023–24.”

The return to the Old Pension Scheme (OPS) by a few states and reports of some other states moving in the same direction would exert a huge burden on state finances and restrict their capacity to undertake growth-enhancing capital expenditures.

Internal estimates suggest that if all the state governments revert to OPS from the NPS, the cumulative fiscal burden could be as high as 4.5 times that of NPS, with the additional burden reaching 0.9% of GDP annually by 2060.

This will add to the pension burden of older OPS retirees whose last batch is expected to retire by the early 2040s and, therefore, draw pension under the OPS till the 2060s.

Thus, any reversion to OPS by the States will be a major step backward, undermining the benefits of past reforms and compromising the interests of future generations.

ALSO READ | NPS investment FAQ: Steps to open, tax benefits, expected returns and more

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Govt borrowings may touch Rs 14.8 lakh crore, states’ Rs 24.4 lakh crore in FY24: ICRA

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Centre as well as state governments are likely to budget for higher market borrowings next fiscal even though the Union Budget may peg a lower-than-expected fiscal deficit at 5.8 per cent of GDP, a report said.

Icra Ratings anticipated that higher redemptions will lead to gross market borrowings of the Centre and states to rise to Rs 14.8 lakh crore and Rs 24.4 lakh crore, respectively, in FY24 from Rs 14.1 lakh crore and Rs 22.1 lakh crore, respectively, in FY2023.

The agency also said the Centre is expected to peg its FY24 fiscal deficit at 5.8 per cent of the GDP, a healthy moderation from 6.4 per cent of GDP projected for FY23.

According to Aditi Nayar, chief economist at the agency, with a global growth slowdown looming large, Budget 2024 needs to focus on sustaining the domestic growth momentum, while at the same time demonstrating a continued commitment towards fiscal consolidation in addition to limiting the rise in market borrowings.

She also expects the forthcoming budget enhancing the Central capital expenditure to Rs 8.5-9 lakh crore and targeting a lower fiscal deficit of 5.8 per cent of GDP, aided by lower subsidies.

Despite this, higher redemptions will enlarge the Centre’s gross market borrowings to Rs 14.8 lakh crore in FY24 from Rs 14.1 lakh crore in FY23.

She said the revenue deficit is expected to fall to Rs 9.5 lakh crore in FY24 from Rs 10.5 lakh crore in FY23, while fiscal deficit may fall only mildly to Rs 17.3 lakh crore from Rs 17.5 lakh crore, respectively, led by higher capex.

Nevertheless, as a proportion of GDP, fiscal deficit is expected to ease to 5.8 per cent from 6.4 per cent.

She said the poll-bound government at Centre is expected to budget for a double-digit growth in capital expenditure at Rs 8.5-9 lakh crore in FY24, up from Rs 7.5 lakh crore in FY23. On the other hand, revenue spending is expected to rise by a relatively muted rate of 3 per cent due to the likely lower food and fertiliser subsidies.

Also read: India GDP Highlights 2023 | Indian economy estimated to grow 7% this fiscal

Given the robust direct tax and GST collections, Nayar said, the net tax receipts are expected to overshoot the budgeted amount by a healthy Rs 2.1 lakh crore in FY23.

Direct tax mop-up grew 24.58 per cent to Rs 14.71 lakh crore in this fiscal till January 10, which is more than 86 per cent of the Budget estimate.

This, combined with expenditure savings to the tune of Rs 1 lakh crore, is expected to partly offset the net cash outgoes announced in the first supplementary demand for grants and the shortfall in non-tax revenue and disinvestment receipts of the central government.

As a result, the fiscal deficit to print in at Rs 17.5 lakh crore in FY23, exceeding the budgeted amount of Rs 16.6 lakh crore; but a larger-than-estimated GDP will allow the gap to remain at the budgeted target of 6.4 per cent of GDP, Nayar said.

She said the government is expected to net borrow Rs 10.4 lakh crore in FY24, down from Rs 10.9 lakh crore in FY23. But higher redemptions will have the gross market borrowings to rise to Rs 14.8 lakh crore from Rs 14.1 lakh crore.

On the other hand, states’ gross market borrowings, which have been compressed in FY23 for a variety of reasons, is expected to touch Rs 9 lakh crore in the coming fiscal and assuming that 75 per cent of this is funded by the debt, their net borrowings will touch Rs 6.8 lakh crore.

Nayar said the gross tax revenue in FY24 is estimated at Rs 34 lakh crore, a 9.4 per cent expansion over projected level for FY23, with growth in direct taxes likely to outpace that of indirect taxes which is likely to be roiled by poor customs duty collections and reversion of excise duty on auto fuels to pre-pandemic levels.

The share of interest payments in total expenditure will remain elevated at 24-25 per cent, owing to an increase in the debt outstanding, underscoring the need to limit borrowings, going ahead, Nayar said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Union Budget 2022: Government unveils record borrowing plan; FY23 bond sales estimated at Rs 15 lakh crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Union Budget 2022, presented by Finance Minister Nirmala Sitharaman on Tuesday, unveils the government’s plans to sell record amount of bonds in the financial year 2023.

According to the budget documents, the government is planning to sell bonds worth about Rs 15 trillion ($200 billion) in FY23. Net borrowings for FY23 are estimated at Rs 11.2 trillion.

“As a part of the government’s overall market borrowings in 2022-23, sovereign Green Bonds will be issued for mobilizing resources for green infrastructure. The proceeds will be deployed in public sector projects which help in reducing the carbon intensity of the economy,” FM Sitharaman said in her Budget speech.

The government has announced Rs 1 lakh crore to assist the states in FY23 “in catalysing overall investments in the economy”. These fifty-year interest
free loans are over and above the normal borrowings allowed to the states, said the FM.

The total expenditure in 2022-23 is estimated at Rs 39.45 lakh crore, while the total receipts other than borrowings are estimated at Rs 22.84 lakh crore.

Among the important things to watch out for in a Budget document is government borrowings. It is the loan that the government takes when it falls short of revenue – tax and non-tax – to fund its spending. The government’s annual borrowing programme includes borrowing through the issue of securities like G-secs and Treasury Bills. While the major source of its borrowing is market, it also borrows from small savings funds, state provident funds, etc.

But like any other debt, the government is also on the hook for paying for the public debt with interest. The government promises to pay the initial principal along with interest upon the maturity of the security, though some securities also offer a periodic coupon or interest payments.

Just like other securities, rating agencies also rate these government borrowing instruments.

>>Also Read | Budget FAQs: What is government borrowing?

In the Union Budget 2021 announced in February last year, the government had projected the gross market borrowing at Rs 12.05 lakh crore for the current financial year. While Rs 7.24 lakh crore, 60 percent of the total amount, was to be borrowed in the first half of the year (H1), the rest was planned to be borrowed in the second half (H2).

The government’s effective borrowing in H1 was Rs 7.02 lakh crore. In September, the government issued a statement saying that it planned to borrow the balance Rs 5.03 lakh crore in H2.

“The H2 FY 2021-22 projection also factors requirements for release of balance amount to states on account of back-to-back loan facility in-lieu of GST compensation during the year,” it had said.

For all the latest updates on Union Budget 2022, follow our LIVE blog here

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Planning a vacation? Personal loan vs credit card vs buy now pay later compared

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Everybody needs a holiday to relax and take a break from routine life. However, whether it’s a weekend getaway or a longer 1-2 week trip, holidays can weigh heavy on one’s wallet. Therefore it is always advisable to create and stick to a budget and use money from one’s savings to pay for a vacation.

However, if one doesn’t have savings on hand, personal loans, credit cards, and buy now pay later (BNPL) can come to the rescue.

But, which of these is actually worth it?

In order to get an answer to this, it’s important to understand all these forms of consumer credit.

All these credit options are of a somewhat similar nature. Be a personal loan, credit card or BNPL – all allow one to buy consumer services upfront with repayment over a definite period but what makes them different is the repayment period and the rate of interest, said Amit Chaturvedi, Co-Founder Paytail while talking to CNBC-TV18.

So, one should make an informed choice considering all the factors.

Elaborating further, Nitin Mathur, CEO at Tavaga Advisory Services said that a personal loan is a collateral-free loan, which can be used to cover all the big-ticket expenses associated with travelling, including airfares, tour packages, hotel charges, etc.

“The eligibility criteria, here, primarily include CIBIL score, age, income, and work experience. Since one can get the personal loan amount upfront, it helps in planning travel better and avoid overspending,” he said.

Credit cards and BNPL, on the other hand, are preferred for smaller ticket-sized purchases and give the convenience to instantly pay for purchases like dining, sightseeing, transportation fares, and other trip expenses. However, it’s important to note that personal loan disbursement requires more documentation while BNPL and credit cards are almost immediate in processing, Mathur told CNBC-TV18.

ALSO READ | How much penalty ‘buy now, pay later’ platforms levy on payment defaults; check details

Talking about the repayment period, Mathur said that personal loans are provided for a longer duration of about 12 – 60 months while BNPL is for more short-term needs, typically 15 days to 3 months. Credit cards borrowings, on the other hand, can be converted to monthly instalments or paid back the following month.

Interest rates are highest in the case of credit cards (in case of a carry forward).

So, with so many considerations how can one choose between the three options?

Replying to this, Anshuman Narain, Vice President at CashBean said that borrowers should either go for a personal loan or BNPL because these are more transparent options and relatively low cost (though that would depend on various factors).

“With good BNPL options one can even get nearly interest-free borrowings and with personal loans also (if one has a decent credit history) can get low-interest credit much quicker than traditional banking,” Narain said.

However, that may not hold true for all.

In the end, the most suitable financing option will depend on one’s financing needs – the loan amount, flexibility requirement, duration for which funds are sought, etc, Mathur of Tavaga Advisory Services said.

“The point is that whichever option one chooses, it’s important to ensure that he/she can afford to repay it before getting into a debt,” Mathur added.

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Byju’s to raise $500 million through Term Loan B borrowings: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Edtech unicorn Byju’s is looking to raise at least $500 million through Term Loan B borrowings in the United States. Byju’s has already hired US-based investment banks JP Morgan and Morgan Stanley for the job. The deal could be upsized “depending on the demand”, a person familiar with the matter told Mint.

Byju’s isn’t approaching a traditional bank and rather going for a Term Loan B as such borrowings usually mature within six to seven years. Additionally, Term Loan B borrowings have a floating interest rate and a large part of the principal and accrued interest is to be paid on maturity.

Besides, investors in the US have been finding the Indian tech ecosystem attractive in the wake of dozens of tech companies becoming unicorns in India. Therefore, Byju’s is looking to secure funds in the West where the interest rates are low and there are massive amounts of liquidity with investors.

The company has to opt for a debt as it has already spent billions of dollars on acquisitions this year, according to the Mint report. The report adds that the company plans to use the money raised through the debt instrument for further acquisitions. Besides, some portion of the money will also be used as working capital.

In the past few months, Byju’s has acquired higher education platform “Great Learning” for $600 million, kids’ digital reading platform “Epic” for $500 million, online test preparation platform “Gradeup”, and test preparation provider “Aakash Educational Services” for $1 billion.

As of September, Byju’s had 6.5 million paid subscribers. Founded by Byju Raveendran, the edtech recorded nearly 80 percent growth in consolidated net sales in the financial year 2019-20 as compared to the previous year.

The unicorn, operated by Bengaluru-based Think and Learn Private Limited, pocketed Rs 2,380 crore income in FY20 as against Rs 1,305 crore in the previous year, according to its regulatory filing. However, the annual expenses of the company shot up by a massive 119.50 percent to around Rs 3,022 crore during 2019-20. Consequently, the consolidated losses for Byju’s rose to Rs 262 crore in FY20 as compared to Rs 8.82 crore in FY19.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

COVID fallout: Friends, families emerge as key source of borrowing to run households

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Roughly one in four families borrowed money to keep their households running during the pandemic, according to a survey by Home Credit India Finance.

The surveyed covered 1000 respondents across seven cities of the country to study the borrowing patterns of the Indian households impacted by pay cut and pay delays.

It revealed that 46 percent of respondents borrowed money from their friends or family primarily to run their households. Moreover, the decision to borrow the money was led by men in 23 percent of households, while the women insisted on either not borrowing or borrowing from financial institutions.

Friends or family were preferred lenders because of the flexibility of repayment involved.

“The impact of the pay cuts/delays was the next big reason why most borrowers resorted to borrowing. 27 percent of the respondents cited repayment of their monthly installments from the earlier loan as the second biggest reason behind borrowing.

14 percent of the respondents borrowed as they suffered job losses,” it said.

The same research conducted in August 2019 cited different reasons for borrowing.

According to the research in 2019, “Among the primary reasons for borrowing money, fulfilling family’s needs topped with 46 percent of the respondents followed by the desire to upgrade their lifestyle which was at 33 percent. Lifestyle upgrades were quoted as an updated smartphone/TV/refrigerator or vehicle.”

“The research also showed that 50 percent of the respondents said they returned the borrowed sum once the situation normalised/they returned to their jobs. 13 percent of the people said they would look at returning the sum after paying their loan amounts,” it added.

This pattern was observed the highest in Mumbai and Bhopal at 27 percent, followed by Delhi and Patna at 26 and 25 percent respectively.

Mark Carevic, Chief Marketing and Customer Experience Officer of Home Credit India, said: “We conduct research every year to understand our customers and their preferences better. The impact of the pandemic is still unfolding, and people have gone through an extremely difficult time.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government allows 20 states to raise $9.4 billion in loans to meet revenue shortfall

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s federal government on Tuesday allowed 20 states to raise market loans amounting to 688.25 billion rupees ($9.39 billion)to meet revenue shortfall in the current financial year ending in March 2021, a government statement said.

On Monday, a meeting between the federal finance minister and state finance ministers had ended without an agreement over who should borrow to cover revenue shortfalls in states.

While about 20 states, mainly ruled by Prime Minister Narendra Modi’s party and its allies agreed to borrow from the market, around 10 which are run by opposition parties insist that the federal government should borrow and compensate them.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

NTPC reports incremental borrowings of Rs 24,056 crore for FY20

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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State-run power giant NTPC on Thursday said that its incremental borrowings during 2019-20 stood at Rs 24,056.50 crore, while its total borrowings were 1,07,373.37 crore as on March 31, 2020.

Incremental borrowings have original maturity of more than one year and these exclude external commercial borrowings, NTPC stated in a regulatory filing.

NTPC raised Rs 7,356.50 crore through debt securities in 2019-20 against the mandatory borrowings to be done through issuance of debt securities worth Rs 6,014.13 in the fiscal, it said.

During the last fiscal the NTPC had acquired government of India’s entire stake in Tehri Hydro Power Complex (THDCIL) India and North Eastern Electric Power Corporation (NEEPCO) for Rs 11,500 crore.

NTPC acquired the government’s 74.496 per cent equity stake in THDCIL for Rs 7,500 crore and 100 per cent equity of the centre in NEEPCO for Rs 4,000 crore.

At present, the largest power generating company in the country has an installed capacity of 62,110 MW comprising of 45 NTPC stations and 25 joint venture stations.

NTPC has formulated a long-term corporate plan to become a 130 GW-company till 2032, it said. PTI KKS KKS
ANS

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow