Govt cancels Rs.12,000 Cr bond issue to contain fiscal deficit

The government, on Monday, cancelled the Rs.12,000-crore bond auctions, lowering its market borrowing programme for the current financial year in its bid to contain the fiscal deficit at 5.3 per cent.

Total borrowing

With this, the total market borrowing by the government in the current fiscal would come down to Rs.5.58 lakh crore from Rs.5.70 lakh crore as envisaged in the 2012-13 Budget.

“On review of the government’s cash position and funding requirement, it has been decided, in consultation with the Reserve Bank of India (RBI), to reduce the government market borrowing through dated securities by Rs.12,000 crore for the current financial year,” the Finance Ministry said in a statement. The auction for dated securities, worth Rs.12,000 crore, scheduled on February 22, had been cancelled, it added.

The government has already borrowed Rs.3.70 lakh crore in the first-half ending September 30, which is 65 per cent of the total planned borrowing. The front-loading of borrowing was done as part of its strategy to make available capital to the private sector in the last six months of 2012-13.

Finance Minister P. Chidambaram had, in November, 2012, raised the fiscal deficit projection for the current financial year to 5.3 per cent, from 5.1 per cent estimated in Budget.

Its cash position has improved with flow of over Rs. 14,000 crore through disinvestments alone in February. Until now, the government has collected around Rs. 21,500 crore from PSU stake sales as against a fiscal target of Rs. 30,000 crore. — PTI