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Market favourable for Govt to borrow more now: RBI
New Delhi, June 27: RBI today indicated that favourable market conditions with soft interest rates and excess liquidity would enable the Government to borrow Rs 7,000 crore more next month.
New Delhi, June 27: RBI today indicated that favourable market conditions with soft interest rates and excess liquidity would enable the Government to borrow Rs 7,000 crore more next month.
While maintaining the soft interest bias, RBI Governor Bimal Jalan also ruled out a repo rate cut as of now.
"Market conditions are good. If Government needs more money, it can be raised," Jalan told reporters here.
The yield on 10-year government papers are at the lowest level, at about 5.75 per cent, while there is excess liquidity in the financial sector.
Taking advantage of this situation, RBI on behalf of government plans to raise Rs 21,000 crore in the first three weeks of July as against the scheduled Rs 14,000 crore.
The central bank plans to auction bonds worth Rs 12,000 crore through three long-dated papers on July one, as against the original schedule of Rs 9,000 crore.
Jalan termed this as an "anticipation" that the government required more funds than was laid down in the borrowing schedule.
The RBI governor dismissed the additional borrowing as a measure to suck excess liquidity from the system, saying "it is not a liquidity drain."
The Centre's gross borrowings stood at Rs 50,001 crore till June 13, as against Rs 55,001 crore in the same period last year, which was an indication of fiscal prudence.
Gross borrowings, including the Rs 7,000 crore mopped up under Centre-State debt swap scheme, till the second week of this month was 30.1 per cent of Rs 1,66,230 crore budgeted for the entire fiscal.
Bureau Report
"Market conditions are good. If Government needs more money, it can be raised," Jalan told reporters here.
The yield on 10-year government papers are at the lowest level, at about 5.75 per cent, while there is excess liquidity in the financial sector.
Taking advantage of this situation, RBI on behalf of government plans to raise Rs 21,000 crore in the first three weeks of July as against the scheduled Rs 14,000 crore.
The central bank plans to auction bonds worth Rs 12,000 crore through three long-dated papers on July one, as against the original schedule of Rs 9,000 crore.
Jalan termed this as an "anticipation" that the government required more funds than was laid down in the borrowing schedule.
The RBI governor dismissed the additional borrowing as a measure to suck excess liquidity from the system, saying "it is not a liquidity drain."
The Centre's gross borrowings stood at Rs 50,001 crore till June 13, as against Rs 55,001 crore in the same period last year, which was an indication of fiscal prudence.
Gross borrowings, including the Rs 7,000 crore mopped up under Centre-State debt swap scheme, till the second week of this month was 30.1 per cent of Rs 1,66,230 crore budgeted for the entire fiscal.
Bureau Report