Centre to borrow more in first half

Centre to borrow more in first half
The Hindu Business Line, July 17, 2009, Page 1

Our Bureau, New Delhi

The Centre has stepped up its first half year borrowing programme by nearly 25 per cent to Rs 2.99 lakh crore.

This is being done to fund a higher-than-anticipated fiscal deficit, owing to higher social sector spending and lower revenue receipts.

The new borrowing level for April-September 2009, arrived at by the Finance Ministry and the Reserve Bank of India (RBI) following a meeting here on Thursday, is Rs 58,000 crore more than the March 2009 projection of Rs 2.41 lakh crore.

For the entire fiscal ending March 31,2009, the Centre’s gross market borrowings have been budgeted at Rs 4.51 lakh crore, about Rs 89,000 crore more than what was projected in the Interim Budget on February 16.

The new borrowing level of Rs 2.99 lakh crore would also mean that Government would in the first half complete about 66 per cent of its total borrowing target of Rs 4.51 lakh crore for the entire fiscal. “So far, the Government has borrowed Rs 1.89 lakh crore (in the first half). The balance Rs 1.10 lakh crore will be raised till September 30 in ten tranches”, Ms Shyamala Gopinath, RBI Deputy Governor, told reporters after meeting the Finance Secretary, Mr Ashok Chawla, and other senior Finance Ministry officials.

On open market operations, Ms Gopinath said that Rs 43,000 crore, out of Rs 80,000 crore announced in March 2009, had already been raised “This would continue through the first half….. We will manage the programme in non-disruptive manner”.

Calendar of borrowing

Later in the day, the Finance Ministry released an indicative calendar of Government borrowing for Rs 1.10 lakh crore through July 18 - September 30.

Although the market had been worried over the size as well as timing of the extra borrowing for the current fiscal, the announcement saw the easing of bond yields as the additional borrowing was below expectations.