Bond market participants are expecting the government to cancel its scheduled borrowing of Rs 7,000 crore in the first week of January even as the market borrowings of the central government has dropped 21% to Rs 87,000 crore till December 24, 2004."The government has completed Rs 87,000 crore of market borrowings, which is about 57.74% of its gross budgeted borrowings of Rs 1,50,681 crore," PNB Gilts said in a report.The borrowing so far this fiscal was lower by 21% from Rs 1,10,000 crore in the year-ago period.Net borrowings after redemption of securities worth Rs 54,316 crore, came down 55.5% to Rs 32,684 crore till December 24 when compared with Rs 73,532 crore in the year-ago period.RBI did not conduct any auction last fortnight as liquidity conditions remained tight on account of advance tax outflow and the consequent rise in cut-off yields of treasury bills, PNB Gilts said."Liquidity is expected to improve on account of interest payouts estimated at Rs 9,500 crore on SDS."With huge cash surplus in the government account, the market expects RBI to cancel the scheduled auction of Rs 7,000 crore in the first week of January. The market is also apprehensive on the likely increase in the overall limit under MSS, the report said.
