The increase in the government’s borrowing plan has been necessitated due to a switch taking place from National Small Saving Funds (NSSF) into dated securities, economic affairs secretary R Gopalan said
New Delhi: The government on Thursday announced that it will increase its market borrowings by Rs52,800 crore to Rs4.7 lakh crore in 2011-12, but said the fiscal deficit target of 4.6% remains intact, reports PTI.
“We are increasing the gross borrowings for the second half (of the fiscal) by Rs52,800 crore. The reason is...small savings collection has gone down...,” economic affairs secretary R Gopalan told reporters here.
With this, the gross market borrowing for the full fiscal 2011-12 will rise to Rs4.7 lakh crore, up from the budgeted Rs4.17 lakh crore. In the previous fiscal, the gross borrowing was Rs4.37 lakh crore.
In the first half of this fiscal (April-September), the government had borrowed Rs2.5 lakh crore through dated securities.
Now, in the October-March period, the scheduled borrowing would be Rs2.2 lakh crore. The net borrowings will work out to around Rs4 lakh crore for the entire fiscal.
Mr Gopalan said the fiscal deficit target of 4.6% of the gross domestic product (GDP) (Rs4.12 lakh crore) will remain intact even as the borrowings increase.
“There is switch taking place from National Small Saving Funds (NSSF) into dated securities. Also we need to work to shore up the cash balance. It has nothing to do with fiscal deficit computation. The target of fiscal deficit remains unchanged,” he said.
Mr Gopalan said there was an increased need to go for dated securities, instead of depending on small savings, as the government had to bridge its fiscal deficit.
The finance ministry also said that borrowing calendar has been programmed in such a way that there remains enough credit for the private sector.
Overall, officials said, small savings have gone down because the interest rates offered by banks are higher than those offered by instruments such as the post office schemes.
Budget calculations were made with estimation of Rs24,000 crore in NSSF, but instead the fund dipped by Rs35,000 crore, a ministry official said.
On the other hand, the government’s opening balance was only about Rs16,000 crore, as against the expectations of Rs24,000 crore due to withdrawals by different departments in the last 15 days of March.
On whether additional market borrowings will squeeze out credit for private sector, the official said, “The borrowing calendar has been planned in such a way private sector borrowings are not crowded out.”
Despite a stronger agricultural growth than what was estimated earlier, the economy is expected to grow about 8% during the current fiscal as there are serious concerns, PMEAC chairman C Rangarajan said
New Delhi: Prime Minister’s Economic Advisory Council (PMEAC) chairman C Rangarajan on Thursday said the government is likely to miss the fiscal deficit target of 4.6% for the current fiscal as growth is expected to moderate, reports PTI.
“In the current year, the budgeted fiscal deficit is 4.6% (of GDP). It is going to be difficult to achieve this. All the numbers do not gel well,” he said, while delivering lecture at golden jubilee celebration of Indian Economic Service here.
“But I think it should be one of efforts to ensure that fiscal deficit is in the lines of what was estimated,” he said.
The economic growth was earlier estimated at 8.2% for the current fiscal.
Despite a stronger agricultural growth than what was estimated earlier, he said the economy is expected to grow about 8% during the current fiscal as there are serious concerns.
“Therefore, taking all these factors into account, I believe the growth rate of the economy can be close to 8% per annum,” he said.
He said the potential growth rate of Indian economy is 9% given the saving and investment rate.
Highlighting the challenges, Mr Rangaranjan said, “I believe there are short-term concerns and medium-term constraints which will come in the way of achieving 9% growth.”
There are three short-term constraints—one is inflation, the second is balance of payment and the third area is fiscal consolidation.
On rate of price rise, he said, “I believe even if inflation is triggered by supply side constraint monetary policy has important role to play.”
When food inflation persists for some time then it gets generalised, he said, “In fact today the non-food manufacturing index exceed 7.5%. Therefore, we should be using monetary policy to tame inflationary expectations,” he added.
Defending the number of rate hikes effected by the Reserve Bank of India (RBI), he said, “We should use monetary policy in way that demand preference is brought down.”
Since March 2010, the central bank has raised policy rate 12 times to tame inflation.
On the Current Account Deficit (CAD), he said, “I don't think that by taking both imports and exports of goods and services taken together we might exceed 2.5% of gross domestic product (GDP) of the CAD this year.”
So far, financing of CAD has not been a problem, Mr Rangarajan said, adding, “The approach paper of 12th Five Year Plan and our own calculation indicates that we will have CAD of 2.5% of GDP.”
At present, there is no problem in financing CAD of 2.5%, he said, adding, “So long we continue to maintain a healthy growth rate and so long as fiscal deficit continue to remain at reasonable control, there should be no problem in attracting capital flow.”
But, he said, capital flows by very nature are very volatile. It is influenced by both domestic and international factors. It is also affected by push factor and as well pull factor. So, therefore, we need to moderate our dependence on the financing of CAD through capital flows.
On the borrowings, he said, “I think the effort of the government will be to retain the fiscal deficit at the budgeted level and I do not expect the borrowing programme of the government of India as of now to exceed what was originally estimated.”
The issue came up after Planning Commission reportedly expressed concerns that UIDAI is departing from set government procedures and suggested a re-look into its structures
New Delhi: Unique Identification Development Authority of India (UIDAI) chief Nandan Nilekani today asserted that the authority set up for issuing national identity cards was working under the powers delegated by the prime minister, reports PTI.
"My powers have been delegated by the prime minister," UIDAI chairman Mr Nilekani said when asked whether the authority was on a collision course with the Planning Commission.
"We are an attached office of the Planning Commission and by series of government orders, several authorities have been delegated to us," he said.
The issue came up after Planning Commission reportedly expressed concerns that UIDAI is departing from set government procedures and suggested a re-look into its structures.
The Commission reportedly in a communication to the finance ministry said UIDAI has not got any of its financial proposal examined by the panel's secretary or financial adviser.
The Plan panel had also suggested to the finance ministry that a full time financial adviser be deputed in the authority.
Explaining further, Mr Nilekani said: "(director general of UIDAI) Ram Sewak Sharma's powers are delegated by the deputy chairman, Planning Commission. The powers of financial adviser K Ganga (of UIDAI) have been delegated by the expenditure secretary.'
"We are working within the powers granted to us. If somebody feels that power should be different, then that is a different matter," he pointed out.
On transparency issue, Mr Nilekani said: "We follow every government process and procurement procedures to the key. We set the highest standards of transparency and integrity in our operations."
"We are working in the government system. We have tight financial controls. Everything is on our website," Mr Nilekani added.
When asked whether there were any problems related to availability of funds, he said: "We are quite happy with finances. We have absolutely no issues. We are authorised to enroll 200 million people and beyond that the Cabinet will take a decision."
About using iris scan for issuing the unique identity number, Mr Nilekani said it is a closed issue because the decision was taken one-and-a-half years ago.
"Iris scan is absolutely imperative. People who work in the fields or other manual labour, the likelihood of their finger prints eroding is there. The cost of an iris scan is marginal at about Rs5 per person and Rs500 crore for entire project," he added.