September 27, 2012 · 0 Comments
The finance ministry on Thursday said it will not borrow more than what it has budgeted in the current year, indicating that the government will try and reduce the slippage in the fiscal deficit to the minimum.
The government will borrow only Rs 2 lakh crore in the second half of the year, taking the gross borrowing to Rs 5.7 lakh crore including repayments. The government has budgeted Rs 3.7 lakh crore borrowing in the first half of the year.
The decision not to go for extra borrowing will help soften interst rates further. The general expectation is that the fiscal deficit will be about 5.6% -5.7% for the year, implying an additional borrowing of Rs 40,000-Rs 50,000 crore.
On a net basis, the government has budgeted a total borrowing of Rs 5.14 lakh crore in the current year, which translates into a fiscal deficit of 5.1% of GDP.
On March 27, the finance ministry had announced Rs 3.7 lakh crore borrowing through dated securities for the first half of the year.
Expectations of higher borrowings in the second half had run up after the government ran up a fiscal deficit of over 50% of the budgeted amount by the end of July.
In the first four months of the financial year the government had raised Rs 2.64 lakh crore through different means, Rs 2.4 lakh crore market borrowing being the biggest component.
For the entire fiscal, market borrowings are pegged at Rs 4.88 lakh crore.
By Web Editor