The savings in interest outgo through the government securities buyback is likely to decline after 2006.
Though savings in interest was expected to be Rs 520 crore (Rs 5.20 billion) this year and about 750 crore (Rs 7.50 billion) annually for the next two years, official sources told PTI "the estimated decline (in interest rates) in the subsequent years will be lower."
The government had bought back 19 high-cost G-secs worth Rs 1,00,438 crore (Rs 1,004.38 billion) from banks and financial institutions and in place re-issued four securities worth Rs 14,434 crore (Rs 144.34 billion).
Asked what could be the reason for projecting the decline in savings, the sources said it was due to the maturity dates of the securities bought back.
For the current year, they said through the buyback, fiscal deficit might bloat by about Rs 2,020 crore (Rs 20.20 billion) but could well be absorbed under the budgeted interest payment of Rs 1,23,223 crore (Rs 1,232.23 billion) for 2003-04.
The new securities offered interest rates of 6.25-7.46 per cent as compared to the bought back instruments, which had rates of 8.00-13.85 per cent.
Apart from the Rs 14,434 crore mopped through the re-issue of G-secs, the government had raised a gross Rs 83,000 crore (Rs 830 billion) till July 23.
This gross borrowings amounted to 50.03 per cent of the budget estimate for this year when compared to over 56 per cent in the previous year period, indicating less reliance of the government on markets.
In absolute terms, the gross borrowings had risen by about four per cent from Rs 80,000 crore (Rs 800 billion) in the corresponding period in 2002-03.
The net borrowings stood at Rs 61,533 crore (Rs 615.33 billion) till July 22, completing 57 per cent of the budgeted borrowings for this fiscal.
Though in absolute terms, it rose by a mere two per cent from Rs 60,095 crore (Rs 600.95 billion) in the corresponding period in 2002-03, the sources said net borrowings as a percentage of the budgeted figure had "remarkably" fallen.
The net mop up till the third week of July amounted to only 57 per cent, while it was as high as 63 per cent in the same period in 2002-03.
The gross and net borrowings have been estimated at Rs 1,65,887 crore (Rs 1,658.87 billion) and Rs 1,07,194 crore (Rs 1,071.94 billion), respectively in this year's budget.
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