Borrowings unlikely to be altered in first half of fiscal: RBI

The Reserve Bank of India (RBI) clarified on Monday that despite a surge in non-tax revenue from radio spectrum auctions, it would be difficult to cut the planned government borrowings in the first half of the current fiscal, the calendar for which has already been released by the central bank.

Many analysts as well as some government officials have expressed optimism that the government might be able to cut its deficit and hence market borrowing required to bridge the income-expenditure gap in wake of much higher-than-expected revenue from the auction of third generation (3G) radio spectrum.

However, K C Chakrabarty, deputy governor of the RBI, said that it was unlikely to happen in first half. ‘I don’t think it will be in the first half. First half goes as per scheduled … It will only be in the second half,’ Chakrabarty said, referring to potential decline in government borrowing in wake of higher revenue from telecom auctions.

The government had budgeted Rs 35,000 crore from the 3G and BWA (broadband wireless access) auctions. It has already ensured more than Rs 67,000 crore of revenue from the sale of 3G spectrum. The BWA auction has also started on Monday and has shown good signs with bids for a pan-India slot rising 34% from the base price on first day of auction itself.

The communications ministry has said that it expects revenue of around Rs 15,000 crore form the BWA auction. In this wake, total revenue from the two auctions will increase to beyond Rs 82,000 crore, thus yielding an excess of Rs 47,000 crore at least compared with the budgeted non-tax revenue. Clearly, there are prospects of decline in deficit and hence market borrowings. However, given the volatile crude prices and possibility of surge in fuel subsidies, it would be sensible anyway to wait for second half before tweaking with borrowing plans.