No additional market borrowings, says Reddy

Despite numerous tax cuts announced in the 'mini-Budget', market borrowings will not get affected as there will not be any additional market borrowings, said Dr Yaga Venugopal Reddy, governor, Reserve Bank of India (RBI) at the sidelines of a function to honour former RBI governor Dr Bimal Jalan here today.

Last week, the government had announced excise rate cuts, duty cuts for imports and liberalisation of current account so as to help capital investments and push forward the reform agenda.

Reddy also said that backed by good economic growth, both the revenue and the fiscal deficit figures will looking more favourable this year. He believed that rate of inflation will start softening towards end of this year.

However, the market did not react much to the statement as data released by the government later the day showed inflation shockingly high at 6.07 per cent.

Even the assurance of no additional market borrowing did not excite as players felt that the abundant liquidity in the system will take care of borrowers without putting pressure on the system.

Meantime, prices of gilts fell by almost 25-30 paise and the ten-year benchmark yield closed higher at 5.13 per cent.

On the issuance of market stabilisation fund, Dr Reddy said that at present, market comments are being invited as to how to design the product.