During the week, the centre has once again breached the 75 per cent-mark of the Rs 11,000-crore ways-and-means advances (WMA) limit, pegged for the first half of the current fiscal. The advances extended by the Reserve Bank of India (RBI) to the centre are pegged at Rs 9,517 crore for the week ended June 5, up from the previous week's level of Rs 8,181 crore.

"Despite the private placement of a Rs 5,000-crore ten-year paper with the RBI on June 3, WMA has gone up to Rs 9,517 crore. It seems that the centre is still facing short-term cash-management problems," a debt analyst with a leading brokerage house said.

On Thursday, the central bank made it clear that it was willing to take privateplacements of government securities to see through the massive government borrowing. This is likely to give rise to higher monetisation and ultimately higher inflation.

The RBI, however, is confident that it can get the securities off its books.

"It will be our endeavour to try and sell those securities (which we take in our books) at the earliest depending on the market conditions. We don't want to have a high level of monetisation.

The monsoon is expected to be good.

If the real rate of growth in the economy is between 6.5 per cent and 7 per cent, there is no reason why there should be high monetisation," RBI governor Bimal Jalan told The Financial Express on Monday.

Increased monetisation on the RBI, owing to a 99 per cent devolvement of a nine-year paper, has seen a rise in the reserve money for the week ended May 29.

Reserve money has grown by 11.3 per cent on a year-on-year basis. During the year, the net RBI credit has gone up by 16.5 per cent, which is up by a whopping 6.5 per cent,as compared to 1997-98.

Subsequently, money supply (M3) has gone up to 17.5 per cent as on May 22. This is a 3 percentage point increase over the previous year's level, thus giving fuel to a rise in inflation.