DAILY NEWS ANALYSIS (UPSC) |27 Jan 2021| RaghukulCS

Explained: Why govt borrows off-budget, and how

Topic in the syllabus: Prelims – Economy

Introduction: Most governments seek to restrict their fiscal deficit to a respectable number. One of the ways to do this is by going for “off-budget borrowings”. Such borrowings are a way for the Centre to give finances to its expenditures while keeping the debt outside the books — so that it is not counted in the calculation of fiscal deficit.

What are off-budget borrowings?

  • According to the last Budget documents, in this financial year the Centre was set to borrow Rs 5.36 lakh crore.
    • But, this figure did not include the loans that public sector undertakings were supposed to take on their behalf or the deferred payments of bills and loans by the Centre.
  • These items included in the “off-budget borrowings” because these loans and deferred payments are not part of the fiscal deficit.
  • Off-budget borrowings are loans that are taken not by the Centre directly, but by another public institution which borrows on the instructions of the central government.
  • Such types of borrowings are used to fulfil the government’s expenditure needs. But the liability of the loan is not formally on the Centre, hence the loan is not included in the national fiscal deficit.
  • This supports to keep the country’s fiscal deficit within limits.
How are off-budget borrowings raised?
  • The government can ask any implementing agency to raise the required funds from the market through loans or by issuing bonds.
  • Public sector undertakings can also borrow for the government.
    • For instance, public sector oil marketing companies were asked to fund for subsidised gas cylinders for Pradhan MantriUjjwalaYojana beneficiaries in the past.
  • Public sector banks are also used to give funding for off-budget expenses.
    • For example, loans from PSU banks were used for the shortfall in the release of fertiliser subsidy.


Context:A study conducted by IIT-Delhi has found that extended periods of exposure to PM 2.5 can lead to anaemia among children under the age of 5 years.

Topic in the syllabus: Prelims – Economy
What is anaemia?
  • Anaemia, measured via low-blood haemoglobin concentration, is characterised by a decreased oxygen-carrying capacity of the blood. It is a condition in which the red blood cells or the haemoglobin concentration within them is lower than normal.
  • Haemoglobin is needed to carry oxygen and if you have not enough haemoglobin, there will be a decreased capacity of the blood to carry oxygen to the tissues of body.
  • This results in fatigue, weakness, dizziness and shortness of breath, etc. The optimal haemoglobin concentration needed to meet physiologic needs varies by age, sex, elevation of residence, smoking habits and pregnancy status etc.
  • The most common causes of anaemia include nutritional deficiencies, particularly iron deficiency, and infectious diseases, such as malaria, tuberculosis, HIV and parasitic infections etc.
  • Exposure to air pollution, especially PM 2.5, has been shown recently to induce systemic inflammation.
  • Anaemia is a serious global public health problem that specifically affects young children and pregnant women.
  • WHO says that 42% of children less than 5 years of age and 40% of pregnant women worldwide are anaemic. 
  • India carries the highest burden of anaemia, especially among women and children.
  • There are various types of anaemia — the most common kinds are dietary iron deficiency, followed by chronic systemic inflammation.
  • The National Iron Plus Initiative in 2011 sought to expand the beneficiaries of the National Nutritional Anaemia Prophylaxis Program to children with 6 to 59 months of age.
Important news in short
  • India has said that the UN Security Council is unable to act effectively to address increasingly complex issues of international peace and security because it lacked inclusivity of those who need to be members ofthe powerful organ of the world body.
  • The IMF on Tuesday projected an 11.5% growth rate for India in 2021, made the country the only major economy to register double-­digit growth this year during the COVID­19 pandemic.
  • Data privacy can take the form of non-­price competition and also can abuse of dominance can lower privacy protection, a study by the Competition Commission of India (CCI) has said.
    • The study also made observations about other nonprice factors such as quality of service (QoS), data speeds and bundled offerings, which are going to be the new drivers of competitive rivalry between service providers in telecom sector in addition to price.
    • CCI noted that an aspect of data in the context of competition in digital communications market is the conflict between protecting consumer privacyand allowing access.
Content related to Ethics (GS-4) in today’s newspaper
  • South African President Cyril Ramaphosa on Tuesday urged wealthy countries not to do hoarding of surplus COVID-19 vaccine supplies, adding his voice to calls for global production to be shared more equally. (Hoarding is an unethical practice | Ethical Issues in International Relations)
  • The Supreme Court has decided to examine a petitionseeking the framing of guidelines for broadregulatory paradigm withinwhich the right to freespeech of broadcasters andelectronic media can be judicially regulated.
    • The petitionhas questioned whether freespeech entails misinformation, fake news, hate speech,propaganda, paid news,communal and derogatoryreportage, incitement andso on.
    • It has alsoasked whetherregulation will amount tocurtailment of the Press ifdone within the parametersspecified under “reasonablerestrictions” of Article 19(2)of the Indian Constitution.
    • The plea said right to lifeand dignity envisaged theright of citizens to “free, fairand unbiased mediareporting”. (Media ethics | Case study)
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