H1FY14 borrowing likely to be at around Rs 3.30 lakh cr

Even as the government has estimated a 4.8% fiscal deficit target, it is likely to front load borrowing in FY14, reports CNBC-TV Aakansha Sethi.

Gross borrowing about 60-65 percent is going to be done in the first half of the fiscal as is the usual trend. This will come to about Rs 3.3 lakh crore in first half (April to September). The government is likely to take a final decision on this in the third week of March.

Also, final decision on the inflation indexed bonds, which was announced in the Budgetis likely to be taken. The government is likely to do inflation indexed bonds of about Rs 2000 crore to begin with in the government securities (G-Sec) segment. They are also going to announce inflation indexed bonds for the retail segment and these are going to be as an alternative to the National Savings Certificate (NSC).

It is going to be launched through post offices so as to ensure a wide reach for them. So, there will be inflation indexed bonds not just for institutional investors but for retail investors as well. The interest rate is going to be benchmarked to wholesale price index (WPI) inflation. It remains to be seen how successful these are in the G-Sec market for them to be launched for the retail segment.

Also, the government has sent the Public Debt Management Bill to the Cabinet Secretariat and it is expected to come up for cabinet approval shortly. This will setup a separate debt management office to manage the government's borrowing. This debt management office will be headed by a chair person and a CEO and will have representation from the Reserve Bank of India (RBI) as well as the government in the form of five directors on the board.