The government will retain its borrowing plan of Rs 4.47 lakh crore this financial year, despite reducing the size of market mop-up by Rs 10,000 crore earlier this month due to cash shortage in the system.
This would be done by having another borrowing after February 11, when the scheduled calendar for mop-up ends, an official source said. He added it could also be done by adjusting the amount within the planned borrowing. The scheduled market borrowing could also be increased till February 11, the source said.
The government had reduced its market borrowings by Rs 5,000 crore each on auctions done on December 10 and December 25, after reviewing the cash position and liquidity situation in the market.
It may also be noted that the Reserve Bank of India (RBI) had blamed the government’s surplus cash balances for aggravating the liquidity situation. “This (liquidity crunch) has been mainly due to the persistence of large government cash balances that have averaged Rs 84,000 crore since November,” RBI had said in its mid-quarterly review of December 16.
The government has collected robust revenues, both from tax and non-tax sources, but has not been spending fast enough, creating cash crunch in the system. The indirect tax collection rose 42.3 per cent to Rs 2.07 lakh crore during April-November this year, which is 66.3 per cent of the overall target of Rs 3.13 lakh crore fixed for 2010-11.
The direct tax collections surged 17.85 per cent to Rs 2.16 lakh crore during April-November. The government also got Rs 65,000 crore more than the budget estimates through the auction of spectrum for high-speed mobile and broadband services.
Originally, the government had planned to raise Rs 4.57 lakh crore from markets this year. But after more-than-expected revenues from spectrum sale, it cut the borrowing size to Rs 4.47 lakh.
