MUMBAI, Dec 3: The Centre on Thursday overshot its gross-borrowing programme by privately placing a Rs 2,000-crore ten-year paper at 12.25 per cent with the Reserve Bank of India, indicating an impending fiscal slippage. Another Rs 1,500 crore will be raised through auction of a three-year paper on Monday. The fresh tranche of borrowing is likely to put upward pressure on interest rates.With this announcement, the Centre's gross borrowing programme in fiscal 1999 has gone up to Rs 80,452 crore against the budgeted Rs 79,376 crore.
The net borrowing programme -- which is now pegged at Rs 55,000 crore -- had been already been exceeded. The net market borrowing programme was pegged at Rs 48,326 crore.
Reserve Bank governor Bimal Jalan and deputy governor YV Reddy have continuously been warning the government on the fiscal front saying that the market will not be able to absorb such a large amount of government papers without any impact on interest rates.
``The importance of containing fiscal deficit tobudgeted levels in the current year cannot be overemphasised. The present inflation rate is a matter of concern and the outlook for industrial growth continues to be uncertain. Any increase in fiscal deficit will put further pressure on the outlook for medium and long-term interest rates, besides adding to the already high rate of monetary growth,'' Jalan had stated in his October mid-term review of monetary and credit policy.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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