The Government will borrow Rs 3.7 lakh crore during April-September, 2012. This is nearly 65 per cent of the gross borrowing for 2012-13.

Meanwhile, the Government has indicated that it might borrow less than the Budget estimate. Mr R. Gopalan, the Economic Affairs Secretary, said that with interest rate hiked on small savings, the net inflow is expected to be higher. If it happens, then the overall borrowing will come down, he added.

The Finance Minister, Mr Pranab Mukherjee, proposed Rs 5.7 lakh crore gross borrowing for 2012-13 in the Budget. Out of this, there will be repayment of over Rs 90,000 crore which bring the net borrowing down to Rs 4.79 lakh crore. The Finance Ministry and the Reserve Bank of India met on Tuesday to finalise the borrowing calendar for the first half.

It was also decided that the net borrowing for the first half will be Rs 2.85 lakh crore which is around 60 per cent of the net borrowing proposed in the Budget.

The borrowing is in line with the market expectations, which expects the Government to borrow at an average of around Rs 60,000 crore a month, or Rs 15,000-16,000 crore per week.

This borrowing programme has been announced at a time when there is pressure on the liquidity. This is clearly evident from the in the banks' borrowing through liquidity adjustment facility (LAF) from RBI. After a record borrowing of Rs 1.95 lakh crore on Monday, the banks borrowed Rs 1.78 lakh crore on Tuesday.

However, the market expects liquidity situation to improve in April with overseas money flow and domestic savings. On the other hand there is possibility of banks' borrowing through LAF to come down.

> Shishir.s@thehindu.co.in

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