Liquidity pressure is being felt due to stagnation in government expenditure due to elections

Mumbai: It is being seen that the government has become active keeping in mind the possibility of cash shortage in the country's financial system during the Lok Sabha elections which will start from April 19 and last for about one and a half months. Liquidity stress is being seen due to halt in government expenditure due to elections.

In the decision taken on Friday, the government announced buyback of bonds worth Rs 40,000 crore. Bond buybacks are expected to ease liquidity stress in the financial system.

Generally during elections, especially during Lok Sabha elections, spending on infrastructure projects and other works is stopped by the government. The Lok Sabha elections, which started from April 19, will continue till June 1 and the results will come on June 4.

Government capital expenditure will be seen to resume only after the formation of the new government after the results.

According to the information received, the country's banking system is facing liquidity shortage since April 20. A banker said, the government spent Rs 2.78 lakh crore in April-June 2023, but due to elections in the current year, this expenditure is seen to be much less.