RBI will manage government borrowings smoothly, says Mukherjee

Finance minister Pranab Mukherjee said that high government market borrowing will not have a negative impact on the private sector as they still have enough money to manage their operations.

Many fear that the high government borrowing, pegged at about Rs.4 lakh crore due to fiscal deficit of 6.8 per cent of GDP in the current budget will leave little money for the private sector to raise from the market. (See: High fiscal deficit to stimulate growth, says Mukherhee)

''Just as the Reserve Bank managed market borrowings of the government, which increased after the stimulus packages were announced last fiscal, without disrupting markets, similarly it will handle it this fiscal,'' Mukherjee told reporters after his customary post-budget meeting with the RBI board in New Delhi today.

Asked whether interest rate will be cut Mukherjee said, appropriate actions would taken as and when required.

''You cannot expect an omnibus reply, but as and when the situation will require appropriate action will be taken,'' he added.

It is to recall that the central bank cut interest rates six times in the recent past. The bank, which last cut interest rates on April 21, is scheduled to meet on July 28 to set the monetary policy.