Will borrow Rs 2 lakh cr in Oct 2012-March 2013, to stick to budgeted target of Rs 5.7 lakh cr for full fiscal
The government is planning to stick to the borrowing programme for the current fiscal. Finance Minister P Chidambaram said on Saturday that as of now there are no plans to go for an additional government borrowing.
The government would borrow Rs 2 lakh crore in the October 2012-March 2013 period, so as to stick to the budgeted target of Rs 5.7 lakh crore for the entire fiscal. Chidambaram also assured that the government will stick to the revised fiscal deficit target of 5.3 per cent of the gross domestic product (GDP) in 2012-13. The earlier target was 5.1 per cent of GDP.
Chidambaram's comments comes at a time when there was lukewarm response to the 2G spectrum auction which fetched the government far less as against the target of Rs 40,000 crore. “In 4 circles spectrum remained unsold. The process of auction is not yet complete. It is only when we sell all the spectrum, the process is completed. The Ministry of Telecommuncations and I are confident that we will reach our target of Rs 40,000 crore,” said Chidambaram.
Chidambaram’s comment may provide some relief to the gilts market on Monday. The yield on the 10-year benchmark gilt 8.15 per cent 2022 rose to a 12-week high of 8.23 per cent on Thursday on speculations that the government will resort to additional borrowing to the tune of Rs 30,000-40,000 crore.
However, a head of treasury with a private bank said that even if we keep the revised fiscal deficit target in mind, there are chances of additional government borrowing to the tune of Rs 20,000 crore.
According to gilt dealers the yield on the 10-year benchmark gilt 8.15 per cent 2022 mat trade in the range of 8.20-8.25 per cent between Monday-Friday. There are expectations of Open Market Operations (OMOs) purchase of gilts by the Reserve Bank of India and if that happens then the yield may drop to 8.15 per cent on the 10-year benchmark gilt.
Chidambaram also said that growth rate of the economy in 2011 declined and it declined further in 2012 taking the average growth rate to 2.3 per cent. But advanced countries recorded steeper decline in growth taking the average growth rate to 1.2 per cent. “India cannot afford to grow anything less than 8 per cent over the next decade and the decade after that. Growth will be 5.5 per cent for the second quarter of this fiscal,” he said.
Reserve Bank of India today said it there is no need to explain the monetary policy and it stands by monetary policy statement.
Slams developers for acquiring huge tracts of land in the name of setting up these tax-free zones but using only a fraction