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Govt's borrowing plan may be affected: RBI

The Reserve Bank of India on Tuesday said the government's budgeted borrowing programme may get affected by lower than anticipated real economic activity, shortfall in divestment proceeds and higher expenditure on account of drought relief.

The gross fiscal deficit at Rs 55,496 crore (Rs 554.96 billion) up to August 2002, lower by about one per cent over the corresponding period last year, constituted 41 per cent of the budget estimate of the current year.

Similarly, the revenue deficit of Rs 45,525 crore (Rs 455.25 billion) accounted for 48 per cent of the budget estimate for the whole year.

The Union Budget for 2002-03 placed government's net and gross market borrowings at Rs 95,859 crore (Rs 958.59 billion) and Rs 1,42,867 crore (Rs 1,428.67 billion), respectively. It completed net borrowings of Rs 74,065 crore or Rs 740.65 billion (77.3 per cent of the budgeted amount) and gross borrowings of Rs 1,10,032 crore or Rs 1,100.32 billion (77 per cent) up to October 25.

RBI said due to existing liquidity conditions and low inflation, government has been able to borrow at substantially lower cost during this fiscal with the weighted average yield through dated securities at 7.52 per cent this year being significantly lower by 192 basis points than 9.44 per cent last year.

RBI said as part of the debt management strategy, it continued to combine auction issues with acceptance by private placement of dated securities consistent with market conditions.

The total private placement of dated securities with RBI during the current year (up to October 25) was Rs 23,200 crore (Rs 232 billion).

The monetary impact of private placement, however, was neutralised by conduct of outright OMO (open market operations) sales of government securities to the tune of Rs 27,000 crore (Rs 270 billion) up to October 25, the policy said.

Scheduled commercial banks' investment in government securities at Rs 66,700 crore (Rs 667 billion) up to October 4 has been much higher than Rs 43,400 crore (Rs 434 billion) in the corresponding period of the previous year.

Commercial banks already hold government and other approved securities much in excess of the prescribed statutory liquidity ratio (SLR) to the extent of Rs 1,66,200 crore (Rs 1,662 billion), constituting 12.3 per cent of their net demand and time liabilities, the policy said.

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