The gross and net market borrowings of the Centre are expected to be lower than the budgeted amounts in 2003-04 even as Reserve Bank of India has expressed concern over the fiscal situation.

"Adjusting for the inflow of states' repayment of high cost loans to the Centre under the debt swap scheme, the gross and net borrowings are expected to be lower by 21 per cent and 33 per cent respectively than the budgeted amounts," RBI said in its 'Report on Currency and Finance' released in Mumbai on Wednesday.

During the first nine months of the current fiscal, the gross and net borrowings amounted to Rs 1,15,036 crore (budgeted Rs 1,66,230 crore) and Rs 77,319 crore (Rs 773.19 billion) respectively, excluding buyback of Rs 14,434 crore (Rs 144.34 billion), it said. This constituted 69.2 per cent of the budgeted gross market borrowings, the report said adding, of the amount raised, nearly 83 per cent was raised through dated securities and the balance through 364-day treasury bills.

Declining trend in interest rates on market borrowings of state governments continued during 2003-04. Upto December 31, interest rate ranged from 6.4 per cent to 5.78 per cent.

RBI report said notwithstanding modest successes in expenditure containment in the recent period, the slippages from budgetary projections underscores the deterioration in the quality of fiscal adjustment.