The budgeted net borrowing programme for 1998-99 was Rs 48,326 crore. The gross borrowing programme is expected to be Rs 83,571 crore in 1999-2000 compared to Rs 79,376 crore in fiscal 1999.

The money market heaved a sigh of relief as the borrowing plan announced was lower than market expectations. The gross borrowing programme was expected to cross the Rs 1,00,000-crore mark. With the gross borrowing programme pegged at Rs 83,571 crore, moneymarket dealers ruled out any pressure on interest rates. "Of course, it all depends on how well the Government can manage its finances. These are just figures but if the Centre is able to stick to the plan, the budget holds out good news for the moneymarket," said ICICI Securities' Sandip Deb.

"Interest rate outlook is just as it was yesterday," he added. "If the Centre wants to achieve the targeted fiscal deficit, revenue generation has to be in order and tax collections have to be on target. Going by the experience, there is nothing sacrosanct about the figures," Deb said.

Analysts expect the Government to cross the budgeted borrowing programme if the revenues are not on target. In fiscal 2000, the revenue deficit is expected to be estimated at Rs 54,147 crore while fiscal deficit is estimated at Rs 79,955 crore representing 4 per cent of the GDP.

This is significantly lower than fiscal 1999 when the fiscal deficit was pegged at 5.6 per cent which is why the borrowing programme of the government has come down, analysts said. Compared to nearly 63,000 crore net borrowing in the current year, net-borrowings for the next year will be in the region of Rs 57,000 crore.

Accordingly global investment bank JP Morgan, with nearly 80 per cent marketborrowings being funded by banks and Reserve Bank, interest rates will be determined to a very large extent by banks' deposit growth and the central bank's comfort level with monetising progressively higher amounts of the deficit.

"Both these factors might not be as favourable in the next year. It will be difficult to find a substitute to the Resurgent India Bond inflow of the current year, which was a big boost to deposit growth. Additionally, sluggish economic activity will reduce the velocity of money, dampening deposit accretion," JP Morgan said.