The Government allayed apprehensions on Saturday that its high borrowings, pegged at about Rs four lakh crore to fund its widening fiscal deficit, will dry up resources for the private sector, a fear that sent stock markets to a tailspin after presentation of the Union Budget.
"The government borrowing will be managed in such a manner, that there is no disruption in the market in favour of the government borrowings and starving of the private sector," Finance Minister Pranab Mukherjee told reporters after his post-Budget customary interactions with the RBI board in New Delhi.
As per the Budget estimate, net borrowing by the government for the current fiscal is pegged at a whopping Rs 3,97,957.47 crore to fund its widening fiscal deficit, projected at 6.8 per cent of GDP this fiscal due to a slew of stimulus packages provided to the economy, still facing impact of financial meltdown.
"I wanted to reassure, there is no inherent contradiction between the monetary policy (of RBI) and fiscal policy (of the Government). We are working in close cooperation (with the RBI), we have done it in the worst period of the present crisis," he said.
Last fiscal also RBI managed the substantial level of borrowing in smooth manner, he said, adding borrowing target of the Government was raised as it provided three stimulus packages hitting its revenue and raising expenditure, thus widening the fiscal deficit.