New Delhi: The government borrowing could be lower by up to Rs35,000 crore ($7.6 billion) in the 2010-11 fiscal year from estimates of Rs4.57 lakh crore ($99.3 bn) on higher-than-expected 3G mobile spectrum sale inflows, a top government official said on Wednesday.
“Almost certainly,” India’s chief statistician, Pronab Sen, told Reuters when asked whether funds raised through the third-generation auction would lower government borrowings in the current fiscal year.
Sen also agreed that if the government raises about Rs70,000 crore through the 3G auction, against the earlier estimate of Rs35,000 crore, it could lower the government’s borrowing by up to Rs35,000 crore.
The auction ended on Wednesday, according to a source with direct knowledge and TV stations but no other details were immediately available.
On Tuesday, bids for one set of nationwide third-generation (3G) mobile spectrum licences in India reached Rs16,531 crore ($3.63 billion) on the 33rd day of an auction, an indication the government could earn revenue of about Rs66,800 crore from the auction.
Last week, finance secretary Ashok Chawla said the government’s market borrowing plan for the first half of the current fiscal year was not expected to change.
Sen, who is the top bureaucrat at the Ministry of Statistics and Programme Implementation, also said economic growth forecast for the financial year 2009-10 was likely to be revised upwards to around 7.5% from 7.2% due to better industrial output growth in the March quarter and agricultural growth.
Growth and inflation
The government is expected to release GDP data for the fiscal year 2009-10 by month end.
On the impact of euro zone sovereign debt crisis, Sen said it was unlikely to affect economic growth for the current fiscal year as the Indian economy is mainly driven by domestic factors.
He, however, said, the euro zone debt crisis could lead to volatility in the foreign exchange market and capital inflows.
“Exchange rates are likely to remain unstable ... portfolio capital flows are likely to be very volatile,” he said.
On inflation, Sen said wholesale price inflation was likely to decline from June, although there were risks of food inflation spilling over to other sectors.
India’s annual headline inflation eased in April to 9.59% from a year earlier, in line with expectations, suggesting that the central bank could hold off from raising interest rates at least until its July policy.
The Reserve Bank of India (RBI) has raised rates twice since mid-March to rein in inflationary expectations, which it said could be exacerbated by capacity constraints.
The markets have priced in a 25-basis points hike in key rates in the July policy review.
Sen also said industrial output growth was likely to remain in double-digits this fiscal year.
“We may not see 15-14% growth, but I think you will still see 10-11% growth (in Industrial output growth),“he said.