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New government's repayments pressure seen past Rs 31,000 cr
Anirban Nag
MUMBAI, Mar 9: The new government's gross borrowing programme will register a quantum jump next financial year as repayments double to touch Rs 31,000 crore. This is likely to put pressure on interest rates, and liquidity will rule at a premium, analysts said.The gross budgeted borrowing of the new government is likely to be Rs 70,000 crore, way above the Rs 52,963 crore in the current financial, analysts said. The hefty rise can be attributed to a nearly 100 per cent jump in repayments on 364-day and government securities. The centre will have to repay Rs 31,000 crore through 364-day treasury bills and maturity of various securities in the current fiscal. In the current financial year, repayments have been comparatively low at Rs 19,143 crore, of which Rs 8,000 crore has been due to redemption of 364-day treasury bills. Good liquidity conditions, low credit offtake and low call rates in the current fiscal saw good subscription to the 364-day auctions. Redemptions on 364-day treasury bills will amount toRs 16,500, while government securities, amounting to Rs 14,803 crore, are set to be redeemed in fiscal 1999. "The fall in revenue collection, failure of PSU disinvestments and a rise in fiscal deficit in the current fiscal will only increase net budgeted borrowings of the government," analyst with a leading foreign brokerage said. The government's net borrowing programme stood at Rs 33,820 crore in the current fiscal and this is set to touch Rs 40,000 crore given the fiscal overrun in 1997-98. "Moreover, with the new government in place, plan and non-plan expenditure will definitely rise. Traditionally, whenever a new government has come to power, expenditure in the social sector has shown a rise. This time, expenditure in the infrastructural sector will also rise," the analyst said. That apart,state governments' borrowing programme will add to the tight interest rate scenario that is likely to prevail.
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