New Delhi

India will borrow additional Rs500 billion ($7.79 billion) this year in a bid to maintain its spending as revenues slow in the $2.3 trillion economy.

The move comes a day after revenue collections from the recently-introduced goods and services tax (GST) slowed, raising fears of a fiscal slippage. The government plans to offset the additional borrowing by curbing treasury bills by more than 600 billion rupees, the finance ministry said in a tweet.

The Reserve Bank of India announced the new borrowing calendar for government bonds until the end of the financial year on Mar. 31 in a statement on its website.

While higher borrowing of dated securities is being offset by the reduction in the planned treasury bills, “concerns regarding a mild fiscal slippage persist on account of the sequential dip in GST collections for November,” said Aditi Nayar, principal economist at ICRA, a local unit of Moody’s Investors Service.

The Asia’s third largest economy originally planned to borrow 5.8 trillion rupees for the fiscal year that ends March 31. It stuck to the target in the bond-sale plan for the second half of the year announced in September. The revised calendar released more than a month after sovereign rating upgrade by Moody’s Investors Service for the first time since 2004, comes amid rising crude prices and lower tax mop-up.

India’s goal is to curb its budget deficit to a 10-year low of 3.2 per cent of gross domestic product in the year ending March. The gap in first seven months has reached 96.1 per cent of the target. Modi’s economic advisers want him to stick to fiscal goals, while some economists favoured relaxing fiscal goals to boost spending.

“There will be an impact on fiscal deficit,” said Soumya Kanti Ghosh, chief economic adviser at the State Bank of India. “It will clear confusion because the markets were expecting a higher borrowing. The uncertainty is over now.”

Governments in the past have resorted to spending cuts to meet budget deficit goals. Given the economy has already slowed since the surprise cash ban last year, trimming expenditure could jeopardise Prime Minister’s Narendra Modi’s efforts to revive growth.

Indian shares dropped from a record, reversing gains on speculations of a fiscal slippage before the borrowing announcement.