FinMin, RBI to decide on borrowing calendar for H2 tomorrow

The Finance Ministry and Reserve Bank of India (RBI) officials will tomorrow finalise the schedule for government borrowings for the second half of this fiscal, taking into account the credit needs of the economy in the festive season.

Finance Secretary Ashok Chawla and RBI Deputy Governor Shyamala Gopinath among other officials will decide on market borrowings for the next half, pegged in the union budget at Rs 1.7 lakh crore.

Armed with over Rs 1 lakh crore of revenue from spectrum sale for high speed mobile and broadband services, the government can afford to either pare its borrowings or distribute it in such a way that it does not take huge resources from the market during the festive season.

The government has pegged its total market borrowings for this fiscal at Rs 4.57 lakh crore, out of which Rs 2.87 lakh crore was fixed for the first half, ending September 30.

During the first half of this fiscal, the government has raised Rs 2.60 lakh crore and will borrow another Rs 11,000 crore on September 24.

The government has so far fixed its calendar for borrowings in such a way that it raises most of the resources in the first half rather than the next six months, when the need for resources by the private sector is on the rise.

As such, the government will be borrowing 63 per cent of its requirements in the first half.

However this time, the calendar is not so skewed toward the first half as the government feels that India Inc has better chances of raising money overseas than last year when funds dried because of global financial crisis.

Last fiscal, government had mopped up 73 per cent of entire borrowings in the first half.

"In 2009-10, in the first half 73 per cent of the total borrowing was mopped up. So, in the first half of the next fiscal (2010-11), it is slightly on the lower side. We expect, based on the inflow and outflow trends in the economy, that corporates and institutions will have a good access to external commercial borrowings," Finance Secretary Ashok Chawla had said, while fixing the calendar of borrowings for the first half of this fiscal.

In the first half, the government raised Rs 10,000-15,000 crore every week.

The government has pegged its borrowing requirements at Rs 4,57,000 crore for this fiscal, slightly higher than Rs 4,50,000 crore mopped up last fiscal.

Net borrowing is at Rs 3,45,000 crore this fiscal, less than Rs 3,98,000 crore of last fiscal.