New Delhi, Sept 01: The market borrowing of the Centre and states surged by 26.7 per cent to Rs 1,06,447 crore till July 2003, even after the government reduced its fiscal deficit by over Rs 7,000 crore. Although Centre`s market borrowing inched up by 6.5 per cent, states went on a borrowing spree mopping up 323 per cent more in the first four months, Finance Ministry officials said.

The aggregate borrowings of states was Rs 22,729 crore in the first four lean months of 2003, compared to Rs 5,369 crore in the same period last year.

Centre`s market borrowing inched up by only 6.5 per cent to Rs 83,718 crore till July 2003, from Rs 78,628 crore in the year-ago period, as fiscal deficit came down by 12 per cent, the officials said.

Centre`s fiscal deficit till July was Rs 52,518 crore, which is 34.2 per cent of the budgeted Rs 1,53,637 crore. The fiscal deficit was Rs 59,527 crore in April-July 2002. The market borrowing of the Centre is budgeted at Rs 1,07,194 crore for 2003-04. The fiscal deficit was lower by 13.7 per cent at Rs 34,141 crore till June. Revenue deficit, however, was higher by 15 per cent at Rs 40,031 crore till June and the gap widened by over 22 per cent at Rs 61,373 crore in July.

A major portion of market borrowing went on to meet the interest outgo. Interest payments amounted to Rs 34,860 crore till July 2003, which is almost two-thirds of fiscal deficit.

While bond market remained buoyant on account of the soft interest regime and government`s borrowing programme, equities market witnessed a bull-run with Nifty gaining by about 23.6 per cent in the last 12 months. Foreign Institutional investors brought in over Rs 8,783 crore during May-July, which is comparable with inflows seen in a full year during the last few years.

The market capitalisation of shares listed in Indian bourses crossed the 200 billion dollar mark or Rs 9,20,000 crore in July end.

Hefty earnings of corporates lowered the Price-Earning ratio to 11 per cent in July 2003 from 17.7 in the year ago month. Bureau Report