Not to cross borrowing limits, mindful of bond yields: Arvind Mayaram

MUMBAI: The Finance Ministry today reiterated its resolve to stick to the 4.8 per cent fiscal deficit target, saying "it will stick to its borrowing programme but will calibrate debt sales according to the market conditions."

"The red line on fiscal deficit (of 4.8 per cent) is sacrosanct and will not be breached, therefore, we are trying to maximise revenues. We are hopeful that we'd be able to reach within the target and after that, whatever that is required to be saved to within 4.8 percent, that will be done.

"I cannot say what estimate (of expenditure cuts) it would be because there's still another six months left. I'd be able to tell you an estimate around 20th March," Economic Affairs Secretary Arvind Mayaram said here.

On the spiking bond yields he said, "we are mindful of what the going yields are and therefore calibrate the borrowing accordingly because markets fluctuate. Its not that they are fixed at one point.

"We will continue with what our requirements are. But we will calibrate keeping in mind the market conditions on the day in which we go out," the senior finance ministry official said.

Mayaram also said he is confident of meeting the divestment target of Rs 40,000 crore, though seven months into the fiscal they have been able to garner only about Rs 1,150 crore.

On his expectation from the forthcoming spectrum sales, Mayaram said "he is bullish."

The government has outlined a total borrowing plan of Rs 5.79 trillion for the full fiscal year, of which 76 per cent have already been used up and the remaining Rs 2.35 trillion is scheduled to be completed during the October-March period.

Mayaram also said the Reserve Bank is expected to switch back to a "more modest" interest rate regime once the investment cycle picks up.

"There is a sense of scepticism in the markets at the moment, possibly because of the uncertainty of the US taper creating volatility both in currency and capital markets, but the international markets are bullish on the country," he said.

On growth, he said the government is quite hopeful of betters numbers going forward.

"Growth should begin to claw its way out of the depths that it had gone to. We are hopeful looking forward that growth will pick up. But I cannot really predict how it would be, but we really hope that the trend continues because we expect that investments which are beginning to happen are because of the clearance of the CCI and other measures taken by the government," he said.