US-64 Redemption Outgo Seen Lower At Rs 2,000Cr

New Delhi, May 18: | Updated: May 19 2003, 05:30am hrs
The cash outgo for the US-64 redemption is likely to be around Rs 2,000 crore against Rs 6,500 crore budgeted this year with large investors opting for the 6.75 per cent tax-free bonds.

Official sources told PTI that the tax-free bonds have had a good response and preliminary estimates put the investments around Rs 10,000 crore with practically all institutional and large investors opting for it.

With savings of around Rs 4,500 crore in cash outgo apportioned for US-64 redemption this year, the fiscal deficit is likely to be less to that extent, the sources said. Fiscal deficit is estimated to be 5.6 per cent of the GDP for this year.

The government had announced the five-year 6.75 per cent tax-free and tradeable bonds effective from June in a bid to reduce the redemption pressure. The annualised returns on the bonds work out to over 9 per cent, factoring the tax component, and this is attractive considering the lower returns from other saving instruments, they said.