Govt to borrow Rs 1.1 lakh cr in ten tranches

Industry is apprehensive that this move may leave no funds to meet their needs

RBI Deputy Governor Shyamala Gopinath The decision was taken at the high level meeting between the senior officials of Finance Ministry and the Reserve Bank of India held here on Thursday.

With this the total borrowing by the government during the first half of the current fiscal (April to September, 2009) will stand at Rs 2.99 lakh crore.

The additional borrowing would be done in 10 tranches and a calendar for this has been decided, RBI Deputy Governor Shyamala Gopinath told reporters after the meeting with finance ministry officials.

As per the budget 2009-10 the government has set a borrowing target of Rs 4,00,996 crore as against Rs 3,26,515 crore in 2008-09. The industry is apprehensive that massive government borrowing will crowd out the fund market leaving virtually no funds for the private sector for meeting its investment requirement.  However, Finance Minister Pranab Mukherjee in his budget reply had assured the industry that the government’s borrowing programme would be done in consultation with the Reserve Bank in such a way that there would be enough space for the private sector to tap funds from the market.

Funds for India Inc

Finance Secretary Ashok Chawla in his post-budget interactive session with industry had assured the Indian Inc that the government would see to it that there was enough funds available for the private sector to tap.

“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 had said in his interaction with reporters.

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