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The Reserve Bank of India will conduct two variable rate reverse repo (VRRR) auctions aggregating ₹2.50-lakh crore on December 28, to absorb excess liquidity from the banking system.
The central bank will conduct a seven-day VRRR auction amounting to ₹ 2-lakh crore and a 28-day VRRR auction amounting to ₹50,000 crore.
At the three-day VRRR auction held on Monday, RBI absorbed liquidity amounting to ₹ 1,29,567 crore against the notified amount of ₹ 2-lakh crore at the cut-off rate of 3.99 per cent.
Three securities
Meanwhile, the government will be raising ₹ 24,000 crore via auction of three securities — Floating Rate Bond (FRB) maturing in 2028 (₹ 4,000 crore), 6.10 per cent Government Security (GS) 2031 (₹13,000 crore) and 6.95 per cent GS 2061 (₹7,000 crore).
Madan Sabnavis, Chief Economist, CARE Ratings, observed that so far, the government has maintained that there will be no excess borrowing, but some developments do justify a higher borrowing programme.
He noted that additional cash expenditure of ₹ 3-lakh crore has been granted by Parliament and there is scepticism on the disinvestment target being attained in the next three months.
Referring to GST, corporate tax and excise collections being buoyant in last three months, Sabnavis said they may not be sustained in the last quarter to compensate for this higher expenditure.
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