Govt unlikely to change mkt borrowing plan

The government is unlikely to make changes to its market borrowing programme despite the tight liquidity in the banking system, a senior finance ministry official said on Thursday.

“We are confident that the government's borrowing programme for the rest of the year will go through smoothly,” the official said.

“The Reserve Bank may intervene if needed. It (RBI) has many instruments to ensure that borrowing goes through uninterrupted,” the official said.

RBI has been pumping in over Rs 1 lakh crore daily through the repo window to infuse liquidity into the system. The government is scheduled to borrow Rs 86,000 crore from the market between now and mid-February.

The government has borrowed Rs 3.61 lakh crore from the market so far in the current financial year started April. Asked whether the government would go in for more debt buyback, the official said, ‘It (debt buyback) is very unlikely because we have got very poor response in the past,’ he said.

The government had announced plans to repurchase dated securities for a total of Rs 28,550 crore in tranches but the response was poor. In the first tranche in October, it had repurchased gilts worth only Rs 2,148 crore against the targeted Rs 12,000 crore.

Oil subsidy
The official said the government's share in total subsidy to state-owned oil marketing companies in the current financial year was seen around Rs 250-260 crore. The government will take Parliament's nod for the subsidy in the third Supplementary Demands for Grants be tabled in the Budget session, which normally starts in the third week of February, the official said.

The government has so far agreed to pay Rs 13,000 crore to oil retailers to partly compensate them for revenue loss on subsidised sale of oil products for the current financial year.

The gross revenue loss incurred by oil retailers for the six months to September is pegged at Rs 31,400 crore. While the payout has already been adjusted by the state-owned oil marketing companies in their July-September earnings, government is yet to release the cash. India's three state-owned oil retailers-Indian Oil Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd--currently sell diesel and cooking fuels at subsidised rates. The government had freed pricing of petrol in June.

The official said the group of ministers will decide the subsidy sharing formula between state-owned oil marketing companies, oil producers and the government.