The centre was forced to float a nine-year paper on May 28 as the government has to go for a fresh floatation of gilts as soon as 75 per cent of the Rs 11,000-crore limit is reached in the first half of a fiscal. As the central bank had fixed the coupon rate 11.90 per cent - much below the expected rate of 12.15 per cent - the security devolved. Besides, the market was uncertain about the interest rates as the paper as floated three days before the Union budget. But, this floatation will bring down the advances marginally.

However, as the government is expected to continue borrowing to meet short-term mismatches, the advances are likely to rise further, triggering afresh floatation, expected through a private placement. For the second half of fiscal year 1998-99, the WMA limit has been pegged at Rs 8,000 crore."The government is likely to go on borrowing for some time till revenues start coming in," an analyst in a leading brokerage house said.

The government has already borrowed Rs 20,000 crore in the past two months and has placed another Rs 5,000 crore privately with the RBI. The government has a gross borrowing programme of Rs 78,000 crore for fiscal year 1998-99 and has already completed Rs 25,000 crore in the first two months. The net borrowing programme has ben pegged at Rs 48,000 crore in the latest budget.