New Delhi: As the slowing economy and large spending measures put pressure on public finances, the government may announce an additional borrowing in its interim budget on 16 February, a senior finance ministry official said on Tuesday,
The government has already sold Rs550 billion ($11.3 billion) of bonds in excess of its budget estimate of Rs1.35 trillion for the current fiscal year ending March 31, and has approved to sell another Rs150 billion bonds before the end of February.
“It’s likely that the remaining borrowing schedule for the current fiscal year may be announced in the interim budget,” the official, who did not wish to be named said.
The yield on the closely watched 8.24% 2018 bond bond rose 7 basis points (bps) to an intra-day high of 6.30% immediately after the comments.
The Reserve Bank of India (RBI) is scheduled to auction Rs70 billion of bonds on Friday, and an auction for the remaining Rs80 billion under the current calendar is due during 13-20 February.
Last week, the apex bank said the budget deficit would be at least 5.9% of gross domestic product (GDP) in 2008-09, well above a budget estimate of 2.5%.
On Tuesday, Junior Finance Minister Pawan Kumar Bansal told reporters the deficit would exceed the budget estimate.
Macquarie Research has forecast the federal fiscal deficit would rise to 6.5% of GDP in 2008-09.
The increased borrowing comes as the government seeks funds to pay for economic stimulus measures, but finances were already under pressure from the costs of oil and fertilizer subsidies, a pay rise for civil servants and debt waiver for small farmers.