Govt market borrowings won’t elbow out private sector: Pranab

Govt market borrowings won’t elbow out private sector: Pranab

New Delhi: Finance minister Pranab Mukherjee on Friday assured the private sector of enough liquidity in the market saying the government, which has 4.17 lakh crore borrowing plans in 2011-12, does not intend to elbow them out.

“So far the borrowing programme is concerned, always we match it in such a way that the others in the market of borrowing are not elbowed out," Mukherjee told reporters after meeting chief executives of public sector banks and financial institutions here.

In the Budget 2011-12, the government had announced a gross borrowing of 4.17 lakh crore from the market, lower than 4.47 lakh crore during last fiscal.

Of this, the government has announced to borrow 60% or 2.5 lakh crore in the first half of the fiscal, leaving enough credit in the market for the private players in October-March period to borrow.

The net market borrowings, after making re-payments, would total 3.43 lakh crore in the current fiscal.

Besides, the government’s plan to raise a massive 40,000 crore from disinvestment of PSUs could squeeze liquidity from the capital market.

In addition, the Government would be losing 49,000 crore due to cut in customs and excise duties on petroleum products.

Cost of credit has increased significantly in the past 16 months because of the tight monetary policy regime followed by RBI since March 2010.