With the third generation (3G) mobile spectrum auction garnering huge funds, finance secretary Ashok Chawla on Monday said that higher-than-expected income may reduce the government borrowing programme.
?It immediately gives us addition in terms of non-tax revenue…the fiscal situation is far more encouraging,? Chawla, said after the High Level Co-ordination Committee on Financial Markets (HLCCFM) meeting held here at the Reserve Bank of India.
?It was difficult to say at this point of time what will be its impact and what will be the requirements in regard to other activities. I don?t think I will be able to comment on what will be its immediate impact on the borrowing programme. We will have to wait and watch,? said Chawla.
He was speaking to the reporters after attending the meeting of high level co-ordination committee (HLCC), which was held in Mumbai on Monday.
The government has projected a fiscal deficit of 5.5 % for FY11. Besides, the government expects more revenue from the forthcoming auction of broadband wireless access which would also give it some additional headroom, Chawla said.
The money garnered from the 3G auction was at Rs 67, 719 crore, almost double the expected amount of Rs 35,000-crore.
Chawla said that he did not visualise any liquidity crunch in the system in the immediate future.
The payment for the 3G auction and advance tax outgo are unlikely to cause any liquidity crunch in the system, he said.
?Our expectation is that this will not cause any liquidity crunch,” Chawla said.
Commenting on other issues that were discussed during the HLCC meeting, Chawla said that strengthening corporate bond market was thoroughly discussed during the meeting. ?We discussed some of the issues related to corporate bond market. What has happened so far and what we need to do in the future,” said Chawla, adding that the objective is to develop vibrant active corporate bond market.
The meeting was chaired by Reserve Bank of India governor D Subbarao.