Perils of high govt bank borrowings

Despite rising interest rates, the federal government is borrowing lots of money from commercial banks to bridge the gap between its income and expenses. And banks are happy. They are earning windfalls by investing in zero-risk government treasury bills and bonds. But the private sector is suffering as most banks cater to only large industrial/ commercial borrowers besides offering consumer loans. Net lending to agriculture and small and medium enterprises remains low. All this is happening because the government has not been able to cut current expenses. And its tax revenues remain below potential. That said, tax revenue collection has been on the rise for the past few years. Its lower-than-targeted growth during this fiscal year can be explained in large part by the fact that the post-flood economy is sinking. But that does not mean that structural issues in the tax collection system have gone away. Quite the contrary. They have instead become more entrenched.