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The Finance Minister, Mr Pranab Mukherjee, has assured the industry that the Government’s market borrowing programme of Rs 4.17 lakh crore for 2011-12 will not disrupt credit flow to the private sector.
“I can assure that our borrowing programme, in consultation with RBI, will be in such a manner that there would be no problem for the private sector,” Mr Pranab Mukherjee told reporters here today after meeting the Central Board of Directors of the Reserve Bank of India.
The industry is facing the brunt of liquidity shortfall and rising interest rates following the Reserve Bank of India decision to raise key policy rates seven times since March 2010 to contain inflation.
In the wake of prospects of tax buoyancy on the back of robust economic growth, the Government has lowered its market borrowings target to Rs 4.17 lakh crore for 2011-12 against Rs 4.47 lakh crore estimated in the current fiscal.
The Finance Minister observed that in the current fiscal too the Centre has carried out market borrowings programme without disrupting the flow of capital to the private sector.
Experts feel lower government borrowings will have a positive impact on the private sector credit needs. It is felt the government borrowings next fiscal would not crowd out resources for the private sector.
During the current fiscal, the Government resorted to gross market borrowings of Rs 4.47 lakh crore, Rs 10,000 crore lower than the Budget estimate of Rs 4.57 lakh crore.
Mr Pranab Mukherjee further said the Government is facing “serious” problems due to the fragile economic recovery in the developed world and the political unrest in the Middle East and North Africa.
“Therefore, fragility of recovery of world economy and uncertainty created because of political unrest in the Middle East and North Africa have serious implications for Indian policy makers,” he said.
He added that volatility in oil prices is further “deepening the uncertainty’’.
The Finance Minister also said that the problem in some of the Eurozone countries could impact India’s exports as India’s shipments to Europe is substantial.
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