Will meet temporary cash needs via short-term loans.
The government today said it would not increase its borrowing in the first half (April-September) of the current financial year. It said it would meet its temporary cash requirements through short-term borrowings, if needed.
However, the government, in consultation with the Reserve Bank of India (RBI), has decided to shift ahead the auction of dated securities to week ending August 19 from week ending September 23, as scheduled earlier, to modulate the cash flows.
The Monitoring Group on Cash and Debt Management, which met here today to review the government’s cash position and market borrowing, said there would be no change in the amount of market borrowing through dated securities with reference to the first half (April-September) borrowing calendar published earlier, the finance ministry said in a press statement released today.
It was decided that temporary mismatches in cash flows, if any, would be managed by issuing cash management bills, which have a maturity of less than 91 days.
The government has planned to borrow Rs 2,50,000 crore in April-September, which is 60 per cent of the total budgeted market borrowing of Rs 4,17,000 crore for the entire financial year. Last year, it had borrowed Rs 4,47,000 crore.
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Recently, Finance Minister Pranab Mukherjee had said borrowing in the year would not expand the target and the government would ensure that the private sector was not elbowed out of the market.
This assumes significance as the government is hard pressed with its finances, while the economy is expected to grow slower than projected. The government aims at restricting the fiscal deficit to 4.6 per cent of the gross domestic product at a time when its expenditure is expected to go up on the back of a rising subsidy bill.
Earlier this month, the finance ministry had announced measures to cut expenditure and restrict fiscal deficit within budgeted limits. It had issued instructions to all government departments to cut unavoidable expenses, including seminars and conferences at five-star hotels or abroad, purchase of new vehicles, foreign travel, appointment of consultants and creation of new government posts. It had also sought discipline in fiscal transfers to states.