Bulk of govt borrowing in H1: Montek

NEW DELHI: The government plans to carry out bulk of its targeted borrowing for fiscal 2010-11 in the first six months, the country’s top policy adviser has said. According to Planning Commission deputy chairman Montek Singh Ahluwalia, the government will borrow more in the first half of the fiscal than the second half.

The idea is to complete most of the borrowings in the first few months because as the economy picks up momentum, there would be more demand for funds by the private sector.

Finance Minister Pranab Mukherjee announced the government’s intention to carry out net borrowings of Rs 3.81 lakh crore for 2010-11 as opposed to Rs 4.14 lakh crore in 2009-10.

Speaking to the media on Tuesday after finalising Karnataka’s annual plan for 2010-11, Mr Ahluwalia pointed out that if international oil prices were to go up further, there would be a case for increasing fuel prices. “India will have to raise fuel prices if international crude prices go up,” he said, adding that lack of action on the domestic fuel price front could lead to a higher fiscal deficit.

The government has targeted bringing down fiscal deficit to 5.5% of the gross domestic product in 2010-11 from an estimated 6.7% in 2009-10.

On bank capitalisation, Mr Ahluwalia said that the Planning Commission has ``strongly recommended’’ that public sector banks should borrow from the market.