The central government has pared its borrowing programme by Rs 867 crore, according to the issuance calendar for dated government securities announced for the second half of the year. The government will be raising Rs 32,000 crore from October 2002 through March 2003.
So far, out of the budgeted gross market borrowing programme of Rs 1,16,867 crore for 2002-03, through the issue of dated paper, the Centre has raised Rs 84,000 crore in the first half of this financial year.
As per the indicative calendar, the government borrowing programme will be complete by the first week January 2003 thereby leaving it with scope for additional market borrowings in February and March, in case the tax collection targets are not up to the mark.
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Further the Centre is seeking to raise the monies by issuing papers all with a maturity exceeding ten years.
"The borrowing programme is comfortably stretched and has been planned in such a manner that it does not cause an upheaval in the market or disturb the yields," said a dealer with a public sector bank.
The centre is raising Rs 11,000 crore in two tranches in October, Rs 12,000 crore in two tranches in November, Rs 4,000 crore in December and Rs 5,000 crore in January.
In fact, the market expected the borrowing programme to overshoot the budgeted gross borrowing programme in view of the drought-like situation in some parts of the country and the consequent expansion in subsidies. Further, with industrial production growing at a slower pace, tax collections are also expected to be impacted.
"By paring the borrowing programme a tad, the Centre is giving comfort to the gilts market, though this will not necessarily result in a jump in prices," said a dealer with a public sector bank.
The RBI also observed in its latest annual report that due to drought conditions, affected states governments will have to step up expenditure in identified areas, while the central government will be required to provide the necessary support.
"Under these circumstances, the possibility of some unanticipated expenditure by the Centre as well as in respect of several States would have to be reckoned with."
"However, on current indications, in view of the comfortable liquidity conditions, such slippages can be accommodated by a combination of measures without seriously impacting the financial markets," the RBI said.