Indian govt set to go in for extra market borrowings

NEW DELHI, Dec 28 (Business Standard): A day after the government said it would borrow Rs 110 billion earlier than scheduled, the finance ministry added that this would not be enough. It would, said the ministry, need to raise more from the market before March than it had planned. The ministry did not specify the amount of additional borrowings. The need for additional borrowings arises because of the government's burgeoning expenditure in the wake of a huge subsidy bill and expected shortfall in receipts. The ministry admitted the fiscal deficit target of 4.6 per cent of gross domestic product (GDP) might overshoot by a significant margin, as disinvestment and tax collections were expected to fall short of estimates. "When fiscal deficit is increasing, there is no option but to borrow more. The government does not want to crowd out the private sector investment but certain moderate borrowings will be done," a senior finance ministry official said. The government had budgeted Rs 4.17 lakh crore of borrowings for 2011-12. In September, it said it would borrow Rs 528 billion more to meet expenditure requirements in the second half of the year, taking the total borrowing to Rs 4.7 lakh crore. This was because of a lower cash balance and dip in collections from small savings schemes.