The Central Government's Gross Market Borrowing Estimate for FY 21

The correct answer to the question is option A, which states that the central government has raised the estimated gross market borrowing crore for FY 21 to 12 lakh crores.

Explanation:

The central government's gross market borrowing refers to the amount of money it borrows from the market to meet its expenditure needs. This borrowing is done through the sale of government securities such as bonds and treasury bills.

The government's borrowing estimate is an important component of the budget as it reflects the projected fiscal deficit and the government's plan to meet its funding requirements. The budget estimate for gross market borrowing is usually announced during the annual budget presentation.

In the case of FY 21, which refers to the financial year beginning from April 1, 2020, and ending on March 31, 2021, the central government initially estimated the gross market borrowing at 7.80 lakh crores. However, this estimate has been revised and raised to 12 lakh crores.

Reasons for the Increase:

1. Impact of COVID-19: The COVID-19 pandemic has had a severe impact on the Indian economy, leading to a significant decline in revenue collections and increased expenditure requirements. The government has had to implement various relief measures and stimulus packages to support businesses and individuals during this crisis. The increased borrowing estimate reflects the need for additional funds to meet these extraordinary circumstances.

2. Fiscal Stimulus: The government has announced several fiscal stimulus measures to revive the economy and promote growth. These measures require additional funding, and the increased borrowing estimate is a reflection of the government's commitment to implementing these measures effectively.

3. Infrastructure Development: The government has also emphasized the importance of infrastructure development to boost economic growth. Increased borrowing will provide the necessary funds to undertake large-scale infrastructure projects across the country.

4. Investor Demand: Despite the challenging economic situation, there has been a strong demand for government securities from investors. This increased investor appetite for government bonds has allowed the government to raise more funds at favorable interest rates, enabling them to revise the borrowing estimate upwards.

In conclusion, the central government has raised the estimated gross market borrowing crore for FY 21 from 7.80 lakh crores to 12 lakh crores. This increase is primarily driven by the economic impact of COVID-19, fiscal stimulus measures, infrastructure development plans, and investor demand for government securities.