The Hindu Business Line : Govt to keep to brrowings schedule

THE Government will go ahead with its market-borrowing programme as scheduled. This is despite the upward pressure on interest rates due to high inflation.

Stating that there was no need for undue concern, Mr D. Swarup, Secretary Budget, Ministry of Finance, said ``We will stick to the borrowing schedule."

Speaking at the sidelines of a seminar organised by the National Institute of Financial Management (NIFM), he indicated that there was no pressure on Government finances. ``The cash position will improve after excise duty collections come on October 15-16. We are expecting about Rs 17,000-18,000 crore inflow from excise duties,'' he said.

The RBI had brought out an indicative issuance calendar for issue of Government securities worth Rs 44,000 crore in the second half of this fiscal, which was much lower than the residual amount of Rs 70,000 crore to be borrowed as per the budget target.

The Centre's gross borrowings were lower by 30 per cent at Rs 66,000 crore in the first half of 2004-05 despite 21 per cent higher fiscal deficit till August. The Finance Ministry has budgeted a gross borrowing of Rs 1,50,681 crore for this fiscal.

Further, the Centre's net borrowings have come down drastically by 70 per cent to Rs 19,224 crore so far this fiscal from Rs 63,532 crore during the same period last fiscal. The Government has budgeted a net borrowing of Rs 90,365 crore for 2004-05. Although borrowings so far have been comparatively lower than the last fiscal, the cost of borrowing of the Government is rising as the yields on G-Secs have moved northwards due to higher inflation.

While admitting that rise in yields on G-Secs will have an impact on Government finances by raising the interest payment only next year, Mr Swarup said that it was well within manageable limits.