The Hindu Business Line : `No change in gross market borrowing estimate'

The Government on Tuesday clarified that there was no change in the overall gross market borrowing of Rs 1,52,856 crore provided for in the budget estimates 2006-07 and that the additional Rs 4,000 crore included in the June tranche was not an addition to the overall borrowing estimated for the year.

As against the planned (in the indicative market borrowing calendar) borrowing of Rs 5,000 crore during June 15-24, there was a decision to borrow Rs 9,000 crore. The Government on June 16 notified the borrowing of Rs 9,000 crore through re-issue of (a) 8-year security for Rs 5,000 crore and (b) 15-year security for Rs 4,000 crore.

The Finance Ministry on Tuesday made it clear that the additional Rs 4,000 crore (included in June 15-24 tranche) would be adjusted against the borrowing scheduled for the rest of the year.

"What we have done is to advance a part of the borrowing that was scheduled for July to the June 15-24 tranche. The annual borrowing level remains unchanged and this advancement should not be seen as an increase in the overall borrowing targets of the government for the current fiscal," a Finance Ministry official said.

The Government had earlier indicated a borrowing of Rs 10,000 crore during July 3-11. Asked the reason for the advancement, the official highlighted the "excess liquidity in the system" and "cash management requirements of the central government".

On whether adjustments of the additional Rs 4,000 crore would be made in the July tranche itself, the official said that a decision would be taken closer to the July 3-11 tranche date.

"We will look at adjustments depending on our requirements. We could do some in July and spread the remaining over a period of time. We may also do the entire adjustment in July itself. No decision has been made on this," the official said.

The official however did not see the advancement of Rs 4,000 crore to June as an exercise primarily aimed at taming inflationary expectations.

So far in the current fiscal, the Government has borrowed Rs 52,000 crore (includes the latest Rs 9,000 crore borrowing).