Finance Minister Pranab Mukherjee on Friday said the decision to borrow an
additional Rs 53,000 crore from the market during the current financial year may not have a bearing on the fiscal deficit.
"It is too pre-mature to say that there would be adverse impact on fiscal deficit...we have to borrow Rs 53,000 crore to ensure that there is an un-interrupted cash flow," he said.
"As far as
fiscal deficit is concerned we shall have to consider various other factors", Mukherjee told reporters.
The government proposes to bring fiscal deficit to 4.6 per cent of the Gross Domestic Product (GDP) during 2011-12 from 5.1 per cent in the previous fiscal.
In order to meet its expenditure in the second half of the fiscal, the government in consultation with the Reserve Bank yesterday decided to borrow Rs 52,800 crore from the market, over and above Rs 4.17 lakh crore estimated earlier.
The experts too feel that the decision to borrow more may not have much impact on the fiscal deficit as borrowings are aimed at making up for shortfall towards small savings.
"As far as fiscal deficit is concerned, present borrowing will not have any impact as it is mainly due to less of small savings", said Anubhuti Sahay, senior economist, Standard Chartered Bank.
Expressing similar opinion, DK Joshi, chief economist of CRISIL said, "fiscal deficit numbers will depend on the small savings. We have not revised the fiscal deficit target for this fiscal yet".
According to government estimates, the small savings during the first quarter (April-June) of the current fiscal declined by Rs 26,542 crore. It had increased by Rs 13,250 crore in the same period last year.
"The decline in small savings collection also impacted government cash management", Finance Ministry said in its quarterly review tabled in Parliament in the monsoon session.
The government finances are also impacted due to lower than expected revenue realisation and slow pace of disinvestment.
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