Journalism of Courage
In the hope that its recent efforts to cut down spends would show results,the finance ministry on Thursday said it would stick to its Budgeted borrowing plan of Rs 2 lakh crore for the second half of the fiscal but admitted that the fiscal deficit could overshoot the target of 5.1 per cent of GDP.
The government will borrow Rs 2 lakh crore in remaining period the current fiscal. We will complete the second half borrowing by end of February, said Arvind Mayaram,secretary,department of economic affairs in the finance ministry after a meeting to decide the borrowing calendar for the second half of 2012-13.
Mayaram also re-iterated the governments commitment to fiscal consolidation but conceded that the fiscal deficit could overshoot the Budget target and touch 5.3 per cent of the GDP this financial year. I dont think we will be able to contain fiscal deficit to our Budget plan of 5.1 per cent (of GDP). It could be 5.2 to 5.3 per cent,which is doable, he said.
Meanwhile,noting that the funding requirements for the second half were drawn based on projected cash flows,he said,It has been decided that short-term borrowing through treasury bills for third quarter will be Rs 1,30,000 crore. With redemption of T-Bills for the period at Rs 1,49,000 crore,net amount will be a negative Rs 19,000 crore.
He also said the size of the borrowing programme for the second half of the fiscal needs to consider the market demand for securities and evolving macro-economic conditions and their implications for the debt market.
Markets had already factored in such an announcement and bond yields fell on Thursday although analysts believe that the government could raise additional funds later in the year. The benchmark 10-year bond yield closed down 1 basis point at 8.16 percent before the announcement.
There are a lot of gaps to be filled and money from disinvestment,spectrum auction is yet to come. We have projected the fiscal deficit at 5.8 per cent in 2012-13. So our own sense is that there will be a slippage which will be funded through additional borrowings that may be announced around December, said Sonal Varma,India economist at Nomura Holdings.
In 2011-12,the government borrowed over Rs 5.1 lakh crore from the market,exceeding the budgeted borrowing target by over Rs 92,000 crore as high subsidy expenditure led to overshooting of government finances.
