High borrowings may push up interest rates: MPs to govt

The Centre's dependence on borrowings, which is about 40 per cent of its entire Budget, came up for debate today in the Rajya Sabha where members said high fiscal deficit would push the interest rates.

Inflation, particularly of food items, too remained an area of concern, they said in the resumed discussion on the general Budget.

Main Opposition BJP said the whopping Rs 4 lakh crore (Rs 4 trillion) gap in the resources was a matter of concern and the impact could be felt on inflation.

Raghunandan Sharma (BJP) said the government had changed the weightage of food items like milk, edible oils and sugar in the price index to downplay the impact of inflation.

"You are trying to deceive the people of the country," he said.

Shobhana Bhartia (nominated) lauded finance minister Pranab Mukherjee for taking a big gamble by allowing high fiscal deficit and said it is a 'bold decision' to revive the economic growth.

She said with the handsome allocations for rural sector, this was a Budget for Bharat, adding 'it pays to concentrate on inclusive growth' as shown in the recent elections.

However, she expressed apprehension that the high deficit may drive up interest rates affecting the private sector. Increase in minimum alternate tax was a bit of dampner in the Budget, she said suggesting setting up of equity fund for small sector units.