Govt parks Rs 38,595 crore with RBI

The government parked Rs 38,595 crore with the Reserve Bank of India during the week ended August 14, even as it struggles to sucessfully execute its record borrowing prgramme of Rs 4.51 lakh cr. Analysts said a large chunk of the surplus( Rs 25,000 crore) is likely to be the surplus profit that the central bank had transferred last week to the government.

According to the latest figures released by the Reserve Bank of India in its weekly statistical supplement (WSS), outstanding government surplus parked with the central bank touched Rs 38,595 crore as on August 14, up Rs 29,499 crore over the previous week���s levels. This is a sharp reversal of the April position in day to day management of government finances .

The government borrowed over Rs 30,000 crore for weeks together during most of April and early May to meet its revenue mismatches, often breaching its agreement with the Reserve Bank of restricting such borrowings.
"Although the government has parked a large sum with RBI, it will be wrong to call it a huge surplus," said Golaka Nath, senior vice at Clearing Corporation of India, the firm that clears and settles all government bond transactions in the country. "The government will actively draw upon this money in the coming days and as such it has no implication for the borrowing programme," he added.

The ten-year yield touched 7.31% on Friday at the end of another Rs 12,000 cr bond auction. The government has so far raised Rs 2.41 lakh crore from the market, just over half of its scheduled borrowing for this fiscal.
In the other developments, foreign exchange reserve including gold and SDR dipped $214m during the week to touch $271bn.

While foreign currency assets dipped $214m, reserves with the International Monetary Fund (IMF) and SDR (special drawing right- the reserve currency with the IMF) dipped $1m and $4m respectively. The value of gold in reserves remained unchanged during the week. A large part of the cross currency revaluation as the dollar has been volatile against major global currencies of late.

Almost 40% of the reserves is believed to be comprised in non-dollar assets including the sterling pound, yen, euro and the yuan, though no central bank makes their currency composition of reserves public. In such a situation, it is estimated that a sizeable portion of the rise in reserves during the week has been on account of revaluation.