Government to borrow Rs46,000 crore more before 31 March

The government will borrow an additional Rs46,000 crore over the two remaining months of the current fiscal to bridge the ballooning revenue-expenditure gap, brought about by the tax concessions and extra spending in the economic stimulus plan intended to spur the economy.

This was announced by Asok Chawla, economic affairs secretary in the finance ministry, after discussions between officials of the finance ministry and the Reserve Bank of India.

The extra borrowing of Rs46,000 crore will take place between 20 February and 20 March, Chawla said after a meeting with deputy governor of the Reserve Bank Shyamala Gopinath.

He said the borrowing would be done in four tranches before the close of the current fiscal year ending 31 March 2009.

The RBI had said it would conduct the extra borrowing programme without ''disrupting'' the market.

"We will ensure that it is carried in a non-disruptive manner," Gopinath said.

Besides the Rs65,000 crore economic stimulus package, big hikes in salaries of government employees, huge subsidies on oil and fertilisers and waivers on loans for small farmers, have depleted the government's spending power.

The government, through two supplementary demands for grants, raised public expenditure by 20 per cent, over the budgeted amount for 2008-09, and slashed excise duty by 4 per cent to fuel growth.

''This year, because of stimulus, because of downturn, the (borrowing) requirement has been more. Therefore, whatever is the requirement of the government, it will have to be met through borrowing," Chawla said.

A slowing economy also meant that the government receipts have remained sluggish while it had to forego a substantial amount in duty which were aimed at boosting demand.