FM hints at delay in second-half borrowing

Finance Minister P Chidambaram on Thursday indicated the government may not immediately go ahead with its scheduled borrowing of Rs 5,000 crore in the second half of February.

"Let's see... I haven't made up my mind. I may not have to borrow immediately but I may borrow later depending on what our year-end position will be," Chidambaram told reporters.

According to the gilt issuance calendar, government is scheduled to borrow Rs 5000 crore between February 14 and 22. On the scheduled borrowing, he said: "There is still some headroom", but did not elaborate.

Gilt prices shot up following Chidambaram's comments. The most widely traded 8.07 per cent 2017 gilt rose to Rs 105.50 from Rs 105.32 earlier. Market players have been hoping that the government may cancel the borrowing owing to the tight liquidity situation.

On Thursday, the RBI injected Rs 82.75 billion into the system through the first one-day reverse repo. In the first week of February, the government had reduced the scheduled borrowing by Rs 3,000 crore to Rs 6,000 crore.