With this borrowing, the government's gross borrowing for the fiscal rose to Rs 80,452 crore. This is in excess of the target of Rs 79,376 crore.

Reportedly, the government will raise Rs 1,500 crore by auctioning a three-year paper on December 7. It is possible that Monday's tranche will be used to repay the Reserve Bank. Theoretically, the government could bring down its gross borrowings below the targeted amount. But it is also possible that it will let the new borrowings inflate total borrowings. Again, theoretically, the borrowings in excess of the target could be wiped out with a lag; that is, with realisations from sales of PSU equity, budgeted at Rs 5,000 crore.

So, it may bepremature to argue on the basis of the December 3 data that the government has overshot the fiscal-deficit target. But there is a fly in the ointment. The assumption that 5.6 per cent of GDP translates into gross boorrowings of Rs 79,376 crore hinges on a projected GDP growth by over 6 per cent. A shortfall in GDP growth would lower the gross borrowing target amount. Besides, two revenue assumptions underpinning the fiscal-deficit target have gone haywire. The proposed subsidy cuts and select excise levies were rolled back. The buoyancy in customs and excise revenues has proved to be elusive in the wake of the slowdown in industrial production. Yashwant Sinha is being glib about adhering to the 5.6 per cent target. The fiscal deficit is slated to touch 6 per cent of GDP.

Sinha need not be apologetic about the higher order of fiscal deficit if a substantial proportion of this goes into capital expenditure. Capital spending will help revive major industries like steel and cement. But profligacy in governmentconsumption expenditure will give a fillip to inflation. As pointed out by the RBI, money-supply expansion has been accelerated by mega monetised deficit this year. If inflation does not abate (to a reasonable 5-6 per cent), the Reserve Bank will have to raise interest rates; such a step will only deter investment. So, merely because the financial system is flush with funds (time deposits with banks are brimming over), Sinha cannot take the country, Chidambaram-style, by surprise. He must come clean on the fiscal deficit.