Mayaram: FY14 divestment programme will be fully met

Adds govt will stick to its 2013-14 borrowing programme

The government's Rs 40,000 crore divestment programme for the current fiscal year ending in March 2014 will be fully met, Economic Affairs Secretary Arvind Mayaram told Reuters in the sidelines of a conference on Thursday.

Govt has so far managed to raise only around $230 million by selling stakes in state-owned oil companies, as ministries squabble over the timing of the issues and as the rupee fell against the dollar. Investors have raised worries the government will fail to meet its fiscal deficit target unless it cuts spending given the decline in revenues.

Mayaram said that the government will stick to its 2013/14 borrowing programme but will calibrate its debt sale plans according to market conditions.

"We are mindful of what the going yields are and therefore calibrate the borrowing accordingly because markets fluctuate. It's not that they are fixed at one point," Mayaram said.

"We will continue with what our requirements are. But we will calibrate keeping in mind the market conditions on the day in which we go out," he said.

The government has outlined a total borrowing plan of Rs 5.79 trillion for the full fiscal year, with Rs 2.35 trillion scheduled to be completed during October-March.

Mayaram also said the Indian central bank is expected to switch back to a "more modest" interest rate regime once the country's investment cycle picks up.

He added that inclusion of Indian bonds into global debt indices is not an urgent concern.

Govt is in talks to include its debt into benchmark indexes compiled by banks such as JPMorgan, hoping to attract billions of dollars in investment.

"It would be interesting to be on the global indices, but it is not a matter which is emergent or so urgent that it would require an immediate decision," Mayaram told reporters.

"There are deliberations which are going on. The Reserve Bank of India is fully engaged with this exercise and we should wait for the outcome of the deliberations."

Earlier in a speech at the same event, Mayaram had also said India was looking at making rupee settlements eligible in Euroclear debt platforms, confirming media reports this month.

"We can actually look at Euroclear and similar participation to make the bonds more internationally competitive," Mayaram said.

($1 = 62.2460 rupees)