New Delhi: Finance minister Pranab Mukherjee on Saturday assured the industry that the government’s market borrowing programme of Rs4.17 trillion for 2011-12 will not disrupt credit flow to the private sector.
“I can assure that our borrowing programme, in consultation with RBI, will be in such a manner that there would be no problem for the private sector,” Mukherjee told reporters after meeting Central Board of Directors of the Reserve Bank of India here.
The industry is facing the brunt of liquidity shortfall and rising interest rates following the decision of the RBI to raise key policy rates seven times since March, 2010, to contain inflation.
In the wake of prospects of tax buoyancy on the back of robust economic growth, the government’s has lowered its market borrowing target to Rs4.17 trillion for 2011-12, against Rs4.47 trillion estimated in the current fiscal.
Mukherjee observed in the current fiscal too the Centre has carried out market borrowing programme without disrupting the flow of capital to the private sector.
Experts feel lower government borrowings will have a positive impact on the private sector’s credit needs.
It is felt the government borrowings next fiscal would not crowd out resources for the private sector.
During the current fiscal, the government resorted to gross market borrowing of Rs4.47 trillion, Rs10,000 crore lower than the Budget estimate of Rs4.57 trillion.
Mukherjee further said the government is facing “serious” problems due to the fragile economic recovery in the developed world and the political unrest in the Middle-East and North Africa.
“Therefore, fragility of recovery of world economy and uncertainty created because of political unrest in the Middle-East and North Africa have serious implications for Indian policy makers,” he said.
He added that volatility in oil prices is further “deepening the uncertainty”.
The finance minister also said that the problem in some of the Eurozone countries could impact Indian exports as India’s shipments to Europe is substantial.