Finmin-RBI meet today to take stock of funds
The finance ministry and RBI will meet on Tuesday to decide if the government needs to borrow more to fund its rising expenses after two rounds of stimulus for the economy.
By ET Bureau |
NEW DELHI: The finance ministry and RBI will meet on Tuesday to decide if the government needs to borrow more to fund its rising expenses after two rounds of stimulus for the economy.
���The cash and debt management group of the government and the RBI is meeting tomorrow. The deputy governor (of RBI Shyamala Gopinath) is coming. After that, we will finalise whatever is the amount, whatever are the modalities,��� Economic Affairs secretary Ashok Chawla told reporters here.
Through two supplementary demands for grants, the government has already secured Parliament���s nod to spend Rs 1,50,000 crore while the slowing industrial production and tax cuts have led to a revenue shortfall of more than Rs 40,000 crore in government finances.
���This year, because of the stimulus package, the requirement has been more. Therefore, whatever is the requirement of the government, will have to be met through borrowing,��� he added. Mr Chawla said that the borrowing route will be decided in the most appropriate manner after consultation with the government and RBI, which raises the debt.
Corporate bond yields rose on Monday as an increase in government borrowing will crowd out corporate issues. The yield on the 2018 government bond ended at 6.33% on Monday, higher than its Friday���s close of 6.19%.
The government has completed most of its Rs 70,000 crore additional borrowing for 2008/09. Tuesday���s meeting will decide how much more the government will borrow.
���The cash and debt management group of the government and the RBI is meeting tomorrow. The deputy governor (of RBI Shyamala Gopinath) is coming. After that, we will finalise whatever is the amount, whatever are the modalities,��� Economic Affairs secretary Ashok Chawla told reporters here.
Through two supplementary demands for grants, the government has already secured Parliament���s nod to spend Rs 1,50,000 crore while the slowing industrial production and tax cuts have led to a revenue shortfall of more than Rs 40,000 crore in government finances.
���This year, because of the stimulus package, the requirement has been more. Therefore, whatever is the requirement of the government, will have to be met through borrowing,��� he added. Mr Chawla said that the borrowing route will be decided in the most appropriate manner after consultation with the government and RBI, which raises the debt.
Corporate bond yields rose on Monday as an increase in government borrowing will crowd out corporate issues. The yield on the 2018 government bond ended at 6.33% on Monday, higher than its Friday���s close of 6.19%.
The government has completed most of its Rs 70,000 crore additional borrowing for 2008/09. Tuesday���s meeting will decide how much more the government will borrow.
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