Govt borrowings not to hit private sector: FM
Finance minister Pranab Mukherjee on Friday said that the government would conduct its borrowing for the year in a manner that would leave enough funds to finance the private sector’s investment needs.Updated: Jul 08, 2011 21:01 IST
Finance minister Pranab Mukherjee on Friday said that the government would conduct its borrowing for the year in a manner that would leave enough funds to finance the private sector’s investment needs.
“So far the borrowing programme is concerned, always we match it in such a way that the others in the market of borrowing are not elbowed out,” he said after a meeting with chief executives of public sector banks and financial institutions.
The government has set out a medium-term roadmap to return to fiscal prudence, targetting to reduce to fiscal deficit to 4.6% of gross domestic product (GDP) in 2011-12 The fiscal deficit for 2011-12 of Rs 4,12,817 crore is proposed to be financed through market borrowings of Rs 3,43,000 crore and the balance through a mix of treasury bills, external debt and other instruments.
Government borrowing is typically frontloaded, with 60-65% of the plan completed in the first half of the financial year itself, as tax proceeds are relatively low in this period.
The debt financing strategy for 2011-12 has been formulated after factoring in the comfortable cash position of the government in the current financial year as existing inflationary expectations in the economy.
Unique Identification Authority of India (UIDAI ) chairman Nandan Nilekani made a presentation on “financial Inclusion and e-payments” at the meeting.
Nilekani highlighted the role of banking network in direct transfer of cash subsidy for fertilisers, kerosene and cooking in real time and other payments to beneficiaries of rural development and social welfare programmes.
Beneficiaries of kerosene, cooking gas (LPG) and fertiliser subsidies will be able to get direct cash transfers through banks, ATMs or even mobile banking after the UIDAI’s recommendations to plug leakages in the system are implemented.
On Tuesday, Nilekani had submitted a 70-page interim report suggesting ways to plug leakages in the fuel and fertiliser sops.