Government may borrow less in 2013-14 : sources

Tags: News
The government is likely to borrow less in the new financial year that begins on April 1 than in 2012/13 because of its surplus cash balance, two government sources told Reuters on Monday.

Lower government borrowing could help bolster India's growth prospects by reducing borrowing costs for private investors and facilitating a pick-up in capital investments, which are projected to hit at least a five-year low this fiscal year.

New Delhi has built up a cash surplus of about 800 billion rupees as a result of Finance Minister P. Chidambaram's deep spending cuts to keep the fiscal deficit down at 5.3 percent of gross domestic product this fiscal year.

"Our borrowing requirement next year will come down, but the (fiscal) deficit number will remain unchanged," said one of the two senior officials with direct knowledge of the matter.

India has set a target of cutting its fiscal deficit to 4.8 percent of GDP in the next fiscal year.

The official, however, said the government is still to work out how much it needs to borrow in 2013/14. Chidambaram will reveal the borrowing plans in his budget speech on February 28.

The government is on track to borrow 5.7 trillion rupees by issuing bonds in the current fiscal year that ends in March. It has thus far raised 5.48 trillion rupees and will borrow the remainder by February 22.

Faced with a tough task of trimming a swollen fiscal deficit that has put India's investment-grade credit rating in peril, Chidambaram has reduced budgeted spending by about 1.1 trillion rupees in the current financial year, some 8 percent of budgeted outlay.

Although those cuts have tightened market liquidity, they have helped shore up government coffers.

"We are intentionally piling up cash to meet redemption requirements," said another official. "You cannot repay next year's redemptions with this year's borrowing."

Government bonds worth about 950 billion rupees are due for redemption in 2013/14.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • India must take the UN’s lead in recognising gay rights

    In what has by now become a matter of course, our judiciary again demonstrated that it is miles ahead of our government in terms of staying in tune wi

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

Today's Columns

Urs Schoettli

Lee’s legacy will always guide Singapore

LEE Kuan Yew, the father of modern Singapore, died last ...

Rajgopal Nidamboor

Forget the past and embrace the present

It is all right to believe that one should always ...

Bubbles Sabharwal

Relationships and bitter realities

It’s a tangled web we spin The relationships we make, break ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture