With Reserve Bank of India's repo rate cut by 0.5 per cent and strong macroeconomic fundamentals like benign inflation, strong forex reserves and stable rupee, GDP growth is expected to be higher and interest rates are poised to touch new lows, PNB Gilts has said.

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The primary dealer, in its latest review, also said the government's net borrowings stood at Rs 61,314 crore (Rs 613.14 billion) till August 22, completing over 57 per cent of the budgeted figure for the whole year.

"With good monsoons, the GDP growth is likely to be much higher than the expected one, while inflation will continue to remain benign. With comfortable liquidity, stable rupee, strong forex reserves coupled with the policy stance of RBI, interest rates are poised to touch new lows," PNB Gilts said.

The net borrowings of the government till August 22 was about two per cent higher than the Rs 60,123 crore (Rs 601.23 billion) in the corresponding period in 2002-03. The Centre has estimated a net borrowing of Rs 1,07,194 crore (Rs 1,071.94 billion) for this fiscal.

Redemptions witnessed a 15 per cent jump to Rs 23,716 crore (Rs 237.16 billion) till the third week of August this year as compared to Rs 20,655 crore (Rs 206.55 billion) for the same period in the previous year.

The government's gross borrowings -- net borrowings plus redemptions -- stood at Rs 85,030 crore (Rs 850.30 billion) till August 22, which was 51.6 per cent of the budgeted Rs 1,66,230 crore (Rs 1,662.30 billion) for this financial year.

On the repo rate cut, PNB Gilts said the markets had been expecting it since June and the RBI's decision was desirable in view of "significant" flattening of the yield curve with spread between short-term and long-term declining to around 1 per cent.