Govt likely to borrow Rs 2.2 lakh cr in April-Sept

The government is likely to borrow about Rs 2.2 lakh crore in the first half of the next financial year, a senior finance ministry official said today.

“In the past, we have been frontloading the market borrowing. Going by that, we may borrow about Rs 2.2-2.3 lakh crore in the first half,” the official said.

The official said the government normally borrows a little over 60 per cent of the total gross market borrowing for the full year in the first half.

The cash and debt management committee of the finance ministry and Reserve Bank of India (RBI) will meet during the third or fourth week of March to finalise the borrowing calendar for April-September, the official said.

The Interim Budget has projected a gross market borrowing of Rs 3.62 lakh crore in 2009-10.

Gilt prices fell on the news of the likely borrowing amount. The most-traded 8.24 per cent 2018 gilt fell 20 paise to Rs 112.75 in a knee-jerk reaction.

Meanwhile, another official said the government might consider private placement of gilts with the RBI as the last option. “We may consider private placement after we exhaust all other options,” the official said.

Private placement of gilts with RBI is barred under the Fiscal Responsibility and Budget Management Act. The government has so far avoided private placement of gilts with RBI in the current year.

Last week, when asked about the possibility of the government privately placing gilts with the central bank, Economic Affairs Secretary Ashok Chawla had said: “We will talk about it, when we come to it (next year).”

The RBI used buyback and de-sequestration of Market Stabilisation Scheme bonds and open market operations to manage market borrowings in the current financial year. The government is projected to borrow Rs 3.06 lakh crore in the current financial year, as against the original plan for Rs 1.45 lakh crore borrowing.