Tuesday, January 12, 2021
Home Business News More government borrowing may crowd out private companies - Times of India

More government borrowing may crowd out private companies – Times of India

MUMBAI: The Financial Stability Report (FSR) has warned that excessive government borrowing could result in crowding out of private investment. The government is expected to borrow more in order to stimulate the economy even as revenues fall short of projections.
The report has looked at business interruption insurance being extended to include pandemic risks, either directly or via reinsurance, where fiscal capacity acts as a limiting factor. If businesses are able to recover losses due to the lockdown from insurance, it will lower the need for the government to provide relief directly or through banks.
The FSR has said that sovereign debt is growing to levels that have “intensified concerns relating to sustainability with crowding out fears in respect of the private sector in terms of both volume of financing and costs thereof”.
What this means is that the oversized government borrowing would not only take away funds from corporates but would also push up overall interest rates in the system.
While the central bank normally does not ease rates when government borrowing rises sharply, this year it has made an exception because of the pandemic by keeping liquidity easy, enabling corporates to borrow more.
“While easier financial conditions do support growth prospects in the short run, the longer-term impact in terms of encouraging leverage and inflating asset prices may give rise to financial stability concerns,” said the report.

Source link

In this blog our main motive is to provide you all kind of latest information about technology, politics, sports, and health. If you want to read this information then you should have to visit our website. This information will help you to increase your knowledge.


Please enter your comment!
Please enter your name here

Most Popular

Trump issues emergency declaration for inaugural – Times of India

WASHINGTON: President Donald Trump is issuing an emergency declaration for the nations capital amid growing concern among local and federal authorities...

Twitter suspends 70,000 accounts linked to pro-Trump QAnon conspiracy – Times of India

SAN FRANCISCO: Twitter Inc said it has suspended more than 70,000 accounts since Friday that were primarily dedicated to sharing

Step by step guide to cope with separation

Step by step guide to cope with separation Source link

Weight loss: 5 at-home exercises to lose inner thigh fat | The Times of India

Step 1: Stand straight with your feet shoulder width apart.Step 2: Squat down to the ground and place your hands in front of...

Recent Comments