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Borrowing programme to go on as planned

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Our Economy Bureau New Delhi
The government today said it would stick to its scheduled market borrowing programme, despite upward pressure on interest rates owing to high inflation.
 
"We will go ahead with our borrowing programme as planned. There is no need for undue concern, as our cash position will improve once we realise excise duty collections on October 15-16. We are expecting an inflow of about Rs 17,000-18,000 crore from excise duties," Budget Secretary D Swarup said on the sidelines of a seminar here today.
 
The Reserve Bank of India (RBI) has brought out an indicative calendar for issue of government securities worth Rs 44,000 crore in the second half of this fiscal. This is much lower than the residual amount of Rs 70,000 crore to be borrowed as per the Budget target.
 
The finance ministry has budgeted a gross borrowing of Rs 150,681 crore and a net borrowing of Rs 90,365 crore for this fiscal. The Centre's gross borrowing was 30 per cent lower at Rs 66,000 crore in the first half of 2004-05, despite a 21 per cent higher fiscal deficit till August.
 
Admitting that the rise in yields on government securities would affect government finances by raising the outgo on interest payments, Swarup said the increase in interest costs was well within manageable limits.
 
Although borrowings have so far been comparatively lower than the last fiscal, the cost of borrowing of the government is rising as yields on government securities have witnessed a northward movement due to higher inflation.
 
The yield on the last 11-year bond issue worth Rs 6,000 crore auctioned by the RBI on the government's behalf on Monday was at 6.79 per cent, higher than that on a similar instrument in the last fiscal.
 
Gross borrowing, which was Rs 94,000 crore during April-October 2003, came down this fiscal amid spiralling inflation and fall in bond prices.

 
 

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First Published: Oct 13 2004 | 12:00 AM IST

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