India unlikely to cancel bond auction even as cash pile grows: sources

MUMBAI Mon Feb 11, 2013 3:27pm IST

A cashier counts currency notes inside a bank in Lucknow July 16, 2009. REUTERS/Pawan Kumar/Files

A cashier counts currency notes inside a bank in Lucknow July 16, 2009.

Credit: Reuters/Pawan Kumar/Files

Related Topics

MUMBAI (Reuters) - India is unlikely to cancel any of its two remaining debt sales this fiscal year as the government wants to keep open all of its options to fund its fiscal deficit, two officials with direct knowledge of the situation said.

Sticking to debt sales could dash recent market hopes the government would cancel at least one of the two upcoming auctions given the build-up in the government's cash balances with the Reserve Bank of India.

The inclination to go ahead with the combined 220 billion rupees in debt sales scheduled for the fiscal year ending in March is reinforced by a cash payout worth 250 billion rupees the government must make to oil companies over the next month and a half, the sources said.

Although neither the RBI nor the government revealed cash balance levels, analysts said recent spending cuts should have raised the amount of state money held with the central bank to around 800 billion rupees.

"Borrowing is linked to the deficit. There could be a temporary mismatch in cash balance. But that does not mean we will cut borrowing," said one official, who was not authorised to speak to the media and declined to be named.

"The decision to cut the borrowing depends on what happens to the deficit. Unless the deficit comes down, you cannot cut borrowing."

The government is scheduled to borrow another 220 billion rupees in two auctions by February 22.

($1 = 53.5450 rupees)

(Reporting by Rajesh Kumar Singh and Suvashree Dey Choudhury, additional reporting by Neha Dasgupta; Editing by Ranjit Gangadharan)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

RBI Policy Review

RBI Policy Review

RBI keeps rates on hold, warns on inflation  Full Article 

Monsoon Season

Monsoon Season

India's 2014 monsoon ends with double-digit rain deficit .  Full Article 

Cleanliness Drive

Cleanliness Drive

Modi orders officials to clean loos on Gandhi's birthday.  Full Article 

Bid to Boost Trading

Bid to Boost Trading

RBI takes small steps to deepen markets.  Full Article 

Car Recall

Car Recall

Maruti Suzuki says to recall 69,555 cars.  Full Article 

China Factory Data

China Factory Data

China final HSBC PMI steady in September on stronger global demand but risks remain  Full Article 

Oil Demand

Oil Demand

India's thirst for oil grows even as China cuts back  Video 

EBay Divests PayPal

EBay Divests PayPal

EBay to spinoff PayPal in 2015  Full Article 

New 'Windows'

New 'Windows'

Microsoft names next operating system 'Windows 10'.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage