New Delhi, Apr 08: Days ahead of Reserve Bank of India's credit policy, PNB Gilts today said "strong" economic fundamentals owing to "comfortable" liquidity was conducive to lower interest rates in the economy. "The strong economic fundamentals aided by comfortable liquidity is conducive to lower interest rate environment," PNB Gilts said in its first report for 2003-04.
Besides, market expectation of a cut in bank rate and CRR (cash reserve ratio) in the forthcoming credit policy of RBI should sustain buoyant sentiments, it said.
"Market, however, is waiting for the borrowing programme of the government to commence and the way it is absorbed by the market," PNB Gilts said.
The gross market borrowings of the Centre were budgeted at Rs 1,66,230 crore during this financial year and of this, Rs 1,40,230 crore were to be raised through date issuances and the remaining Rs 26,000 crore through the 364 day treasury bills.
Of the Rs 1,40,230 crore mop up through dated issuances, the Centre has estimated to mop up Rs 71,000 crore during the first half of 2003-04, which was way below Rs 84,000 crore borrowed through this route in the corresponding period in the previous year.
Citing the buoyant exports growth, surplus balance of payments and inflows of Rs 6,000 crore through coupon payments and redemption of date securities in the first half of this fiscal, PNB Gilts said "thus raising of these borrowings (for 2003-04) should not be a problem." Burewau Report