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India earmarks additional $26bn on inflation control

 

The Indian government has disclosed that it is considering to spend an additional $26 billion to control high level of inflation in the country.

The government said that the $26 billion will be for the 2022 and 2023 fiscal year, to cushion consumers from rising prices and fight multi-year high inflation

Speaking to newsmen on Saturday, the Indian Finance Minister, Nirmala Sitharaman, confirmed that the new measures will be to double the 1 trillion rupees hit which government revenues could take from tax cuts on petrol and diesel.

According to other Indian government officials, the government estimates another 500 billion Indian rupees additional funds will be needed to subsidize fertilisers, from the current estimate of 2.15 trillion rupees.

One of the officials said: “We are fully focussed on bringing down inflation. The impact of Ukraine crisis was worse than anyone’s imagination.”

” The government may need to borrow additional sums from the market to fund these measures and that could mean a slippage from its deficit target of 6.4% of GDP for 2022-23.”

Another official added that: “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 1 trillion-1.5 trillion rupees in the 2022/23 fiscal year started on April 1.”

” The additional borrowing will not impact the planned April-September borrowing of 8.45 trillion rupees and may be undertaken in January-March 2023.”

The officials, however, did not quantify the amount of borrowing or fiscal slippage, but said it depended on how much funds they eventually divert from the budget in the fiscal year.

Earlier in February, the Indian government had announced plans to borrow a record 14.31 trillion rupees in the current fiscal year.

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