Garg to meet RBI’s Acharya to discuss borrowing calendar

RBI Deputy Governor Viral Acharya will meet Economic Affairs secretary Subhas Chandra Garg on March 22 to discuss the borrowing calender for 2018-19 fiscal.

The government has plans to borrow Rs 4.07 lakh crore from the money market in 2018-19. According to sources, they would along with other ministry officials, discuss the issues on the timing, tools  of the government borrowing.

Meanwhile the primary dealers on Wednesday asked the government to issue more shorter-dated securities to help boost declining demand in debt markets, said a finance ministry official after meeting with  market participants about the country's borrowing plans.

The government will borrow Rs 4.07 lakh crore from the market in 2018-19, which is nearly Rs 73,000 crore lower than the current fiscal borrowing.

As per the revised estimate, net borrowing for the current fiscal was steeply raised to Rs 4.79 lakh crore against the Budget estimate of Rs 3.5 lakh crore.

Gross borrowing has been pegged at Rs 5.99 lakh crore for 2017-18, marginally higher from Union Budget estimate of Rs 5.8 lakh crore. However, gross borrowing, which includes repayments of past loans and interests, for the next fiscal has been raised to Rs 6.05 lakh crore. Repayment for past loans for the next fiscal has been pegged at 1.4 lakh crore.

Government raises funds from the market to fund its fiscal deficit through dated securities and Treasury bills, having maturity of less than one year. The government deviated from its fiscal deficit target of 3 per cent to 3.3 per cent of gross domestic product for the next fiscal, indicating pressure on the fiscal math.

Last month, the government curtailed its additional market borrowing programme by 60 per cent to Rs 20,000 crore as it expects additional transfer of surplus cash from the Reserve Bank in the current financial year ending March 31. The decision to lower additional borrowing, which was taken after a review of revenue receipts and expenditure, will help contain fiscal deficit that has come under stress on account of lower goods and services tax mop up.

The dealers, the sources said, also made a case of increasing the foreign portfolio investment (FPI) limit to attract more overseas investments in the government securities (G-secs).

In December last year, the Reserve Bank had increased the limits for investment by FPIs for January-March 2018 quarter by Rs 6,400 crore in Central Government Securities (Central G-Secs) and Rs 5,800 crore in State Development Loans (SDLs), taking them to Rs 2,56,400 crore and 3,01,500 crore, respectively.