Comments
The Centre will borrow Rs 2.5 lakh crore in the first half (April-September) of the coming financial year 2011-12, the Economic Affairs Secretary, Mr R. Gopalan, said here on Friday. Net borrowing for the first half of year has been pegged at Rs 1.9 lakh crore.
Like most of the previous financial years, the Centre has decided to frontload its borrowing during 2011-12 also. The gross borrowing target of Rs 2.5 lakh crore for H1 is 60 per cent of the annual target of Rs 4.17 lakh crore set for that year. This is lower than the Rs 2.80 lakh crore that the Government borrowed in the first half of 2010-11. For the first half of current fiscal, the borrowing target as a percentage of the full-year total was 63 per cent.
Officials from the Finance Ministry and the Reserve Bank of India met here at the North Block to decide the borrowing calendar for the first half of financial year 2011-12. The RBI Deputy Governor, Ms Shyamala Gopinath, represented the central bank at the meeting.
Mr Gopalan said that the Government will frontload its borrowing to allow space for private sector borrowing in the second half of 2011-12. “Our own requirement in absolute terms is the same, which means in percentage terms borrowings is less. So there is free space for private sector to access the market,” he told reporters here.
The Finance Ministry official pointed out that the private sector gets into the market in second half and the State Governments also access the market in that period. “So the Government (centre) typically frontloads its borrowing,” Mr Gopalan said.
In the past five years, it was only in financial year 2008-09 when the Centre's first half issuance of debt securities was lower than the second half. The financial year 2008-09 was an exception mainly on account of the fiscal stimulus announced by the Government in the second half to minimise the adverse impact of global financial crisis.
Cash surplus position
Meanwhile, Mr Gopalan said that Government cash surplus position stood at Rs 90,000 crore. The Centre expects the net redemption of government debt in April-September 2011 to be around Rs 60,000 crore out of the total Rs 74,000 crore scheduled for the entire financial year 2011-12.
On liquidity, Ms Shyamala Gopinath said that open market operations (OMO) could be resorted to by the central bank if needed. The RBI Deputy Governor said that the central bank had already stated that its comfortable liquidity position was +/- 1 per cent of net demand and time liabilities (NDTL). The RBI will take steps to achieve that and OMO is one of them, Ms Gopinath said.
The overall gross borrowing target of Rs 4.17 lakh crore for 2011-12 is lower than the borrowing target of Rs 4.57 lakh crore set for 2010-11. Indications are that the Centre would end 2010-11 with a gross borrowing of Rs 4.37 lakh crore and net borrowing of Rs 3.25 lakh crore.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.