PC to meet RBI board tomorrow

Finance Minister P Chidambaram will hold discussions with Reserve Bank of India (RBI) the monetary policy implications of budget tomorrow and finalise the borrowing schedule by month end.

Chidambaram will meet the RBI board on Saturday and explain the various measures taken in the budget. The finance ministry officials and RBI board will discuss the monetary implications also.

Finance ministry officials will also have meetings with RBI in the third week of March to draw up the schedule for government's market borrowing and market stabilisation scheme (MSS) for the first half of 2005-06, an official said.

"Borrowings is likely to be lower than the budgeted amount in the next fiscal," official said referring to expenditure control measures and buoyancy in tax collections.

Government is expected to come up with longer-maturity papers depending on the appetite of the market in the next fiscal. With inflation sliding to less than 5%, the yields on government bonds is also likely to come down.

"We may come up with more floating rate bonds along with the fixed rate bonds," the official said.

Centre's market borrowing is budgeted at Rs 1,00,836 crore in 2005-06.

The revised estimate for borrowing is Rs 71,034 crore for this fiscal as against the budgeted Rs 1,15,501 crore in a year which witnessed spiralling inflation and yields on government bonds.