Mumbai: The huge government borrowing is likely to put pressure on interest rates in the remaining part of this fiscal, member of Parliament and former Reserve Bank governor, C Rangarajan said today.
“This year the government borrowing will be four times than projected in the 2008-09 budget. This is going to be a large borrowing. It will put some pressure on interest rates,” Rangarajan told reporters at the Skoch summit.
However, a low appetite for credit from the private sector this year would facilitate the public borrowing in the first-half of the year, he said.
This would help to minimise the impact of borrowing on the interest rates, Rangarajan said, adding it is a matter for the Reserve Bank to manage.
Rangarajan said the Indian economy is expected to recover from the impact of global recession in the second half of 2009 but a full recovery would happen only in 2010.
Asked about the chances of the Chinese Yuan replacing the US Dollar as reserve currency, Rangarajan said he did not expect that to happen immediately.