Government borrowing seen getting a boost with PM as FM

02 December 2008

The government's borrowing programme for the current financial year ending March 2009 is likely to exceed the budget limit even as it has already raised nearly 80 per cent of the budgeted amount.

The return of prime minister Manmohan Singh to the finance ministry, who has taken additional charge for now, is likely to give a boost to the government's borrowing programme, say analysts.

Manmohan Singh as an ex-RBI governor is known for his risk appetite through his days at the Reserve Bank and the finance ministry and analysts expect him to take appropriate decisions, including a stepped-up borrowing programme, for meeting government spending, both on the plan and non-plan sides.

The government has already lined up an extra Rs105,000 crore in spending for the current financial year (April-March 2008-09), including Rs70,000 crore in farm debt waivers.

The government is expected to reach its annual borrowing limit with a planned auction of bonds worth Rs39,000 crore between October and mid-December, ie, the third quarter of the current fiscal year.

An extended borrowing programme would take the government's current year borrowing beyond the Rs145,000 crore budget limit, say analysts.