Govt to rely on market borrowings to raise public spending: FM

Finance Minister Pranab Mukherjee today said the government would continue to rely on market borrowings to spur economic growth and restore the growth momentum witnessed earlier.

"This (increased spending by incremental borrowing) would need to be further continued in 2009-10, the current year," the minister told the reporters saying fiscal consolidation could take two to three years.

"Let me say unambiguously that we are committed to restoring growth and employment and that would not have been possible without increased spending funded by incremental borrowing," Mukherjee said.

The government during the current fiscal aims to borrow Rs 3,08,647 crore, about 17 per cent more than the last fiscal.

As regards fiscal consolidation, he added, "We are equally committed to the process of fiscal consolidation over a period of say two to three years."

The government since December has been trying to arrest the impact of financial consolidation on the country by raising public expenditure and reducing taxes which led to increase in fiscal deficit.