Even though the rupee has begun to slide in the international markets, especially against the dollar, the Budget estimates of the finance ministry show that it expects the fiscal year to end with the domestic currency maintaining an appreciating trend. 
 
In the Budget, the ministry has banked on the prospect of a rising rupee in foreign exchange based transactions. 
 
For instance, in the Expenditure Budget, the ministry has more than halved the contribution it would have to make towards the exchange loss on the India Millennium Deposits (IMD) to Rs 208 crore (Rs 2.08 billion), from Rs 423.90 crore (Rs 4.24 billion) provided in 2003-04. 
 
As per an arrangement worked out between the finance ministry and the Reserve Bank of India, the government provides for the anticipated exchange loss on the two borrowing programmes of IMD in 2001 and the Resurgent India Bonds in 1998, made by a consortium of banks led by the State Bank of India from international markets. 
 
The loss for the ministry is made good by matching investment in the government securities by the Reserve Bank of India, under the arrangement known as the matching of value account. As a result there are no net loss for the ministry. 
 
In the last fiscal, the finance ministry made a provision for Rs 712.47 crore (Rs 7.12 billion) towards this head in the Budget estimate. But since the rupee appreciated throughout 2003-04, the RBI did not have to step in. The bulk of the borrowing for the two bonds was in dollars. 
 
In 2002-03, the finance ministry had provided for Rs 1,383.39 crore (Rs 13.83 billion) under the same head in the Budget estimate. But the fall in the value of rupee in the foreign exchange market was tempered in the latter half of the year. As a result, the total RBI support for the redemption loss for the Centre worked out to Rs 374.22 crore (Rs 3.74 billion) only. 
 
The ministry has also reduced the exchange loss it anticipates on NRI Bond scheme from Rs 1.34 crore (Rs 13.4 million) in the Budget estimates for 2003-04 to Rs 1 crore (Rs 10 million) for the current fiscal. 
 
Government officials said the initial trend in the value of the rupee at the beginning of the fiscal was that of an upward movement. They said if the domestic currency did not recover in the course of the year, they would revise the matching of value accounts, accordingly.