Government sticks to market borrowing target for 2013/14

Move signals govt's intent to narrow fiscal deficit

The government stuck to its budgeted market borrowing for this fiscal year on Monday, despite a slowdown in revenues, signalling its intent to narrow the fiscal deficit.

The government will borrow Rs 2.35 trillion from the market between October and March via bonds as part of its Rs 5.79 trillion borrowing for the fiscal year through to March 2014, said Economic Affairs Secretary Arvind Mayaram.

He also reiterated the government's willingness to cut public spending in an election year if needed, to trim the deficit to 4.8% of gross domestic product in this fiscal year from 4.9% a year ago.

"We believe revenue will be in line with expectations. In case there is a shortfall, there will be a reduction in expenditure of non-essential nature," he said.

Last week, Finance Minister P Chidambaram ordered austerity measures including a ban on holding meetings at five star hotels and creation of new posts in federal government departments to offset a slowdown in tax revenues in a slowdown-hit economy.

Finance Ministry officials reckon the austerity measures will result in a savings of Rs 10,000 crore this fiscal year.

The government is due to sell Rs 14,000 crore of bonds this week, taking its overall borrowing in the first six months of the fiscal year to Rs 3.44 trillion.

Average borrowing via bonds sales will be Rs 15,000 crore per week between October and February.

In addition, the government will consider replacing about Rs 50,000 crore of shorter tenor debt with longer dated paper in the second half, Mayaram said.