The Hindu Business Line : Fiscal deficit will not be in 'double digits': Montek

NEW DELHI: Seeking to mollify the fears of banks that high government borrowing would not allow interest rate to come down, the Planning Commission said on Sunday the fiscal deficit will be high but not in “double digits”.

“Bankers are always concerned about the size of the government's borrowing. Because it is very very large, many of them think that the interest rate on government debt will rise and they would rather retain liquidity now in order to invest in high-yieldi ng government bonds,” Planning Commission Deputy Chairman Dr Montek Singh Ahluwalia said.

He, however, advised bankers to wait as nobody knows what the government borrowing would be till the Budget and added that “I feel it will be possible to accommodate a reasonable fiscal deficit”.

As regards the likely fiscal deficit in the current year, Dr Ahluwalia said, “I don't want to speculate on any of the Budget numbers, but I have no doubt that the central government's fiscal deficit will not be in double digits”. People, he stressed, “sh ould not look for a return this year to the normal fiscal deficit, which used to be 3 per cent. It should be significantly higher”'

Fiscal deficit, which is roughly the difference between total expenditure and total receipts, is an indicator of government borrowing. - PTI

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