Ad Hocs Fall To Rs 325cr

The fall in ad hocs for the week ended September 20 was a massive Rs 5,620 crore. The ad hocs a week earlier stood at Rs 5,945 crore. With the current fall, the total outstanding on-tap bills stand at Rs 29,770 crore as on September 20, 1996, down from Rs 35,390 crore during the previous week.

Sources attribute the fall to the receipt of advance tax by the government. On September 15, the last day of paying advance tax and a couple of days prior to that there was a huge inflow to the government coffers, which was used to wind down the incremental levels.

 

Says a banker, "On September 13, the level of ad hocs was Rs 5,945 crore and the next week it fell to Rs 325 crore, which clearly indicates that the advance tax money that flowed in on September 15 was used to wind down the outstanding position."

According to an RBI release last week, the net issue of ad hocs over March 31, 1996, was Rs 3,360 crore which was below the within-the-year and year ceilings of Rs 9000 crore and Rs 5000 crore, respectively. The net ad hoc issue has stayed within limits since August 14. The incremental ad hocs had peaked in the current year at Rs 22,095 crore on July 5. The current year has been punctuated by very high level of ad hocs week after week. In fact, even in the first week of the 1996-97 the ad hocs stood at Rs 1,890 crore as of April 5.

Sources, however, feel that the ad hoc level is not likely to stay so low for a very long time and will definitely rise above the Rs 9000-crore mark soon. Except for the past week the incremental ad hocs have always been above Rs 9000 crore.

Resort to ad hoc treasury bill will be stopped from March 1997 onwards. After this the government will have to redeem the all outstanding ad hocs in not more than 90 days. The ad hoc method of financing the government is proposed to the replaced by ways and means advances, which essentailly meet the day to day mismatches of the government not bridge the deficit. The outstanding under the ways and means advances will have to vacated periodically.