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UTI bailout not to impact borrowing this year

The government on Tuesday said the Unit Trust of India bailout will not put any pressure on total borrowing of Rs 1,35,000 crore (Rs 1,350 billion) for this financial year impacting the fiscal deficit target of 5.3 per cent of the gross domestic product.

"Certainly total borrowing does not segment expenditure. We are confident that the bailout for UTI this year do not require breach of limit (of Rs 1,35,000 crore) for borrowing," Finance Secretary S Narayan told reporters.

Every government liability was on taxpayers account, he said when pointed out that taxpayers had to cough up.

But there would be no additional burden on borrowing, he said, adding that cash outgo for Rs 6,100 crore (Rs 61 billion) bailout for UTI's US-64 scheme was only Rs 1,000 crore (Rs 10 billion) of which Rs 500 crore (Rs 5 billion) has already been provided and the remaining would be allocated in the next batch of supplementary demands for grants.

The remaining Rs 5,100 crore (Rs 51 billion) would be provided by way of bonds, that too next financial year when investors would redeem units in May next, he said.

Also, Narayan said the revenue collections were buoyant this year. Revenue growth has been good so far as a result borrowing was less this year as compared to corresponding period last year.

Borrowing was 11 to 12 per cent so far this year as compared to the corresponding period last year and as a result fiscal deficit as on July end this year was only 2.3 per cent of GDP as against 2.58 per cent of GDP around this time last year, additional secretary (budget) D Swarup said.

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