The Centre may complete about 60% of its R6 lakh crore FY16 gross market borrowing in the first half of the year...
The Centre may complete about 60% of its R6 lakh crore FY16 gross market borrowing in the first half of the year, to make room for state governments and private players to borrow more in the second half. In a post Budget interaction, finance secretary Rajiv Mehrishi had said the government plans to front load market borrowing in FY16 to meet payment obligations as tax collections would remain weak in the initial months.
The details of the borrowing calender for government securities will be worked out at a meeting between Finance Ministry and Reserve Bank of India officials in the last week of March. Most likely, the market borrowing strategy for FY16 would be similar to FY15, sources told FE. Out of the total market borrowing of R5.92 lakh crore in FY15, the central government borrowed Rs.3.52 lakh crore or about 60% in April-September.
The central government borrows more in the first half of the year because states borrow more in the second half of the year. Also, the government does not want to crowd out private investment which picks up in the later part of the year.
This is a strategy keeping in mind the liquidity conditions and money market positions, said a source.
The government is trying to contain borrowing by tapping more non-tax sources of revenues such as from auction of telecom bandwidth and shares in a clutch of companies including public sector firms. The budget aims to bring down Centre’s fiscal deficit to 4.9% in FY16 from an estimated 4.1% in FY15.