New Delhi: Government is considering spending an additional Rs 2 lakh crores ($26 billion) in the current fiscal to cushion consumers from rising prices and fight multi-year high inflation, two government officials told reports. The new measures will be double the Rs 1 lakh crore hit government revenues could take from tax cuts on petrol and diesel the finance minister announced on Saturday, both the officials said.
India’s retail inflation rose to an eight-year high in April, while wholesale inflation rose to at least a 17-year high, posing a major headache for Prime Minister Narendra Modi’s government ahead of elections to several state assemblies this year.
“We are fully focussed on bringing down inflation. The impact of Ukraine crisis was worse than anyone’s imagination,” one official said. The government estimates another Rs 50,000 crore additional funds will be needed to subsidise fertilisers, from the current estimate of Rs 2.15 lakh crore.
The government could also deliver another round of tax cuts on petrol and diesel if crude oil continues to rise that could mean an added hit of Rs 1 lakh crore – Rs1.5 lakh crore in 2022-23 started on April 1st, the second official said. The Government plans to borrow a record Rs 14.31 lakh crore in the current fiscal year, according to budget announcements made in February.
The other official said the additional borrowing will not impact the planned April-September borrowing of Rs 8.45 lakh crore and may be undertaken in January-March 2023.