According to money market experts, the shortfall in the revenue collection will put pressure on the gross borrowing programme which in turn will put an additional burden on the financial system as the market will have to subscribe to it.

R Madhavan of ICICI Securities (fixed income research) said: "The market expects the borrowing programme to exceed by Rs 10,000 to accommodate the fiscal deficit."

Added Anil Agarwal, market research, JP Morgan: "The shortfall in the revenue collection coupled with the slow progress in the government's disinvestment programme will put pressure on the government to increase its gross borrowing programme by another Rs7,000 crore to Rs 10,000 crore."

According to market sources, the rise in the government's borrowing programme will put pressure on the interest rates. However, with easy liquidity banks may not be averse to the idea of subscribing to government papers as the credit pick-up is still slow in the current fiscal.

The centre has almost completed its gross borrowing programme of Rs 79,376 crore. With a 10-year Rs 2,000-crore private placement issue at 12.25 per cent and announcement of the 20-year on-tap stock at 12.60 per cent the Reserve Bank -- the government's investment banker -- is set to see through the government borrowing programme.

The RBI may not need to float another dated paper as an estimated Rs 3,500-4,000 crore will be mopped up by the auction of 364-day treasury bills over the next few months will complete the programme.

Money market experts are of the view that Rs 19,000 crore worth of medium-and long-term papers (part of the market borrowing programme) -- currently lying with the centralbank -- will be offloaded in the market through the RBI's open market operations over the next few months. "This will further increase the supply of medium- and long-term gilts which will put pressure on the interest rates of gilts," sources said.

Due to tight call rates, the activities in open market operations were subdued last week. "Activities resumed towards the end mainly in 11.40 per cent 2000 paper. The RBI hiked the sale price for the security to Rs 100.15," said an I-Sec report. According to I-Sec sources, the central bank has a stock of Rs 200 crore worth 11.40 per cent 2000 paper.