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Economics

India Mulls $13 Billion Extra Borrowing to Offset Fuel-Tax Cut

  • Higher debt to offset 1t rupees loss from lower excise revenue
  • Yield on 10-year India bonds rose about 20bps in past month
A motorcyclist waits to fill up at a gas station in Hyderabad, India.

A motorcyclist waits to fill up at a gas station in Hyderabad, India.

Photographer: Dhiraj Singh/Bloomberg

India will probably borrow the entire 1 trillion rupees ($12.9 billion) that the government will forgo as revenues due to a cut in gasoline and diesel levies, according to people familiar with the matter.

Higher collections from the goods and services tax as well as personal income taxes will be neutralized by additional spending on food and fertilizer subsidies that the government is giving to the poor and farmers, said the people, who declined to be identified as the discussions are private.