Borrowing to meet spend will go on, says govt

Borrowing to meet spend will go on, says govt

Finance Secretary Ashok Chawla

The Centre, on Tuesday, said it would continue to resort to market borrowing in a measured way to raise funds to meet expenditure. “Our borrowing will be a mix of treasury bills and securities bonds,” Finance Secretary Ashok Chawla told reporters ruling out monetising the government debt.

“The government is of the view that its market borrowing in the range of Rs 10,000 crore and Rs 15,000 crore per week is a comfortable figure and would not crowd out the fund market thus leaving enough elbow room for the private sector to tap funds from the market,” Chawal said.

Assuring the industry that it would not be starved of funds because of government’s market borrowing, he said “we have a good plan to handle it.”

“With the economy showing signs of recovery there will be buoyancy in revenue collection. So the pressure on the government for going for market borrowing will lessen,” Chawla said.  On its impact on market, he said the government would see to it that there was enough funds available for the private sector to tap.

“We will have discussions with the Reserve Bank of India to work out how much borrowing the government could tap from the market without putting pressure on funds availability,” he said.

While the budget 2009-10 pegged government borrowing in the current fiscal at over Rs 4 lakh crore, the government has set a target of market borrowing at Rs 2,40,000 crore in the first half. So far the in the current fiscal the government has raised funds to the tune of Rs 1,60,000 crore to Rs 1,65,000 crore. Further, he said, the government will come out with a “clear” road map for carrying out disinvestment in Public Sector Undertakings (PSUs) in three to four weeks time.


“We will have a clear road map for PSU disinvestment in three to four weeks time. The road map will indicate the list of PSUs to be taken up for divestment as well as quantum of equities to be divested in these units,” Chawla said at an interactive session on the General Budget 2009-10 organized by the CII here.

However, he made it clear under the proposed exercise of PSU disinvestment there would be no strategic sale of any PSU and added the government would retain 51 per cent stake in all public sector units. “The finance ministry is currently holding talks with concerned ministries for identifying PSUs for disinvestment,” Chawla, who is also Secretary Department of Disinvestment, said.

Asked whether the proposed road map would indicate the amount of funds expected to be raised through offloading of government equities, he refused to make any comment.

As per the Budget document for 2009-10 the government has proposed to collect Rs 1,120 crore this fiscal from divestment of stake in PSUs.

In response to a query Chawla said divestment of government equities would inject more competitiveness into the PSUs “as there will be expectation of better financial results with diversification of equity base.”

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