Higher Wma Sees Rbi Speed Up Auctions

Ways and means advances to the Central government has been consistently close to the limit of Rs 10,000 crore in the current fiscal, forcing the central bank to complete more than 29 per cent of the gross government borrowing programme.

According to the weekly figures published by the Reserve Bank of India (RBI), the WMA figure was way above the Rs 10,000 crore mark on April 6 (Rs 16,130 crore) and April 13 (24,193) crore. This initiated the central bank to conduct auctions of Rs 18,000 crore by April 18. WMA came down to Rs 5,461 crore on April 20. But respite was not long-lasting as the figure rose close to Rs 10,000 in May. The central bank conducted auction of Rs 4,000 crore on May 18 as the WMA remains at Rs 8,552 crore.

 

An analyst with an investment bank said: "Last year, the less than the targeted government borrowing programme raised the hope that the easy interest outlook of the government bond market will not be disturbed by the too many auctions. But as the WMA figure remained consistently high, players are afraid that the government will take advantage of the lower interest rate regime mostly leaving little space for them."

Usha Thorat, chief general manger, internal debt management (IDM) cell, RBI, at a conference on debt market, also said the fiscal consolidation is needed to curtail the number of primary issues of government papers which would help the secondary market grow.

The WMA figure, if compared on a point-to-point basis, remained higher than the last year's figure most of the time as well. An analyst with an investment broking firm said: "WMA is generally on the higher side during the first quarter of the current fiscal and the government paper auctions are also more frequent during that time. However, these years figure are exceptionally high."

The fear that the government borrowing programme will overshoot is supported by the finance minister's suspicion that the actual tax collection will fall short by Rs 10,000 crore of revised estimate figure of Rs 1,98,321 crore putting burden on the government exchequer.