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Flush with funds,Centre snips borrowings by Rs 10K crore

Flush with funds from 3G spectrum auction and robust tax collections,the Centre has trimmed its full year borrowing target by Rs 10,000 crore.

Flush with funds from 3G spectrum auction and robust tax collections,the Centre has trimmed its full year borrowing target by Rs 10,000 crore. It now plans to raise only Rs 1,63,000 crore from the market in the second half of the fiscal as against the earlier expectation of Rs 1,73,000 crore.

“Looking at the projected cash flows and the funding requirements,it is not necessary to raise the entire amount. So we are reducing it by Rs 10,000 crore as of now. RBI will ensure that it is done in an orderly manner,” said finance secretary Ashok Chawla on Thursday after a meeting with central bank officials to finalise the Centre’s borrowing calendar for the six months of the fiscal starting October 1. Consequently,the Centre’s gross borrowing target of Rs 4.57 lakh crore for 2010-11 now stands reduced to Rs 4.47 lakh crore. Of this,it has already raised Rs 2.73 lakh crore and will raise another Rs 11,000 crore on Friday in its final scheduled auction for the first half of the fiscal year.

“The second-half borrowing will be wrapped up by February 11,” said Shyamala Gopinath,deputy governor at the Reserve Bank of India,adding that floating rate instruments will be issued if needed. The government will be borrowing in tranches of Rs 10,000 crore to Rs 11,000 crore per week,as per the calendar released by the RBI. It will raise 67 per cent or Rs 1,00,000 crore of the second half target in the calendar year 2010.

“It’s not surprising at all. They had the extra money which would help cut down the fiscal deficit and so reduce the borrowing as well. It will be good for the markets as well as which was already facing tight liquidity,” said DK Joshi,chief economist at rating agency Crisil,adding that it is unlikely to increase the borrowing target later.

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The government’s total expenditure in 2010-11

is pegged at about Rs 11.5 lakh crore while its fiscal deficit is targeted at 5.5 per cent of the GDP.

First published on: 24-09-2010 at 01:59 IST
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