The government has borrowed Rs28,000 crore ($5.7 billion) from the Reserve Bank of India (RBI) through transfer of  its intervention bonds to the government account, as part of a record borrowing programme planned for 2009-10 fiscal.

''On a review of its cash position, the Government of India, in consultation with the Reserve Bank of India, decided to transfer an amount of Rs28,000 crore from the MSS cash account to the normal cash account of the Government of India on 2 May 2009,'' an RBI release said, adding, ''An equivalent amount of government securities would accordingly form part of the normal borrowing of the Government of India for the fiscal year 2009-10.''

The government plans to borrow a total of Rs33,000 crore from the market stabilisation scheme (MSS) in this financial year.

The government had borrowed a total of Rs3,02,000 crore in fiscal 2008-09.

Earlier, on 4 March 2009, an amount of Rs12,000 crore was transferred from the MSS cash account to the normal cash account of the Government of India following the amendment to the memorandum of understanding on the market stabilisation scheme (MSS).

An equivalent amount of government securities accordingly formed part of the normal borrowing of the Government of India for the fiscal year 2008-09. It was also decided that based on the emerging fund requirements of the government, Rs33,000 crore of MSS balances will be de-sequestered against the approved market borrowing programme or bought back in the fiscal year 2009-10.

The MSS outstanding as of 4 May 2009 stood at Rs42,773 crore, the RBI release said.

The RBI said it had taken steps to ensure a smooth borrowing programme for the government in the current fiscal year that began on 1 April.

The 10-year bond yield briefly ticked 1 basis points lower to 6.25 percent on the announcement. It has dropped more than 100 basis points since hitting a four-month high of 7.37 per cent in mid-March.

The outstanding amount under the MSS account was Rs42,773 crore on 2 May, the RBI said.

RBI has also bought back Government of India bonds in recent weeks to ensure adequate investor appetite for new auctions.