The Union Finance Minister, Pranab Mukherjee has alleviated fears corned around limited resources for private borrowers and expected rise in the interest rates in immediate future considering expected large government borrowings, following by widening fiscal deficit gap.
The Union Budget pegs borrowing around Rs 4.51 lakh crore for this fiscal.
The laying confidence in the efficiency of Reserve Bank of India in debt management, Mukherjee said, "the central bank was efficient enough to handle the proposed debt-raising programme of the Government in 2008-09, and would continue to do so."
"In 2008-09 the Government had projected a borrowing programme of about Rs 1 lakh crore. But on account of low revenue on the back of slowdown in the economy, the borrowing was up at nearly Rs 3 lakh crore. But the RBI had managed the debt efficiently," Mukherjee added.
The minister said that the center is working along with regulator RBI, to manage debt to prevent rise in the interest rates - "I have already spoken to the board of directors of RBI. We shall do debt management in such a way that interest rates will not go up. Corporate sector does not have to pay a higher interest rate," he said.
The Minister was speaking at a conference on Sunday, following the simultaneous inauguration of 154 branches and 2,151 ATMs of banking major, State Bank of India.
Contrary to the view, bankers expect a rise in the interest rate, considering the expected demand inflow from the fiscal deficit which is stated to be 6.8 percent for the current fiscal.
The minister also revealed that a committee through Central Statistical Organisation (CSO) has been set up for the converging Consumer Price Index and Wholesale Price Index to control functioning of interest rates.