Government in talks with RBI to step up borrowing

09 February 2009

The government is in talks with the Reserve Bank of India on ways of meeting additional financial requirements for stepped up government spending programme against an expected decline in the country's economic growth.

The RBI and the government will ensure that additional funds raised are managed in an efficient and orderly manner, RBI governor D Subbarao said.

The RBI governor's statement comes after the government announced a hike in spending to pump-prime the economy, which is currently witnessing a downturn.

The government estimates the Indian economy to grow at 7.1 per cent this fiscal – the slowest since 2003-04 – amidst a fall in industrial growth that has led to heavy job losses.

Speaking at a meeting of central bank governors' Asian Consultative Council of the Bank of Settlement, Subbarao said the Reserve Bank ''will manage the calendar of borrowing to ensure markets are not destabilised in any way; we will manage in an efficient and orderly manner."

The RBI governor, however, admitted that the global situation was uncertain and hence it was difficult to calibrate a roadmap in advance.