A whopping 42 per cent increase in redemptions of government securities and 364 day treasury bills led to an over 14 per cent decline in the net borrowings of the Centre till December 26, according to PNB Gilts.

Net borrowings, which stood at Rs 77,319 crore (Rs 773.19 billion) till December 26, thus, completed 72.12 per cent of the budgeted figure of Rs 1,07,194 crore (Rs 1,071.94 billion) for 2003-04, PNB Gilts said.

The government's net borrowings were as high as Rs 90,318 crore (Rs 903.18 billion) in the year-ago period, showing that the present period level was down by 14.39 per cent.

Redemptions rose by 42.04 per cent to Rs 52,151 crore (Rs 521.51 billion) till December end as compared to Rs 36,715 crore (Rs 367.15 billion) during the previous year period.

However, gross borrowings rose marginally by two per cent to Rs 1,29,470 crore (Rs 1,294.70 billion) till December 26 as against Rs 1,27,033 crore (Rs 1,270.33 billion) in the same period of 2002-03.

With this, the Centre has completed 77.88 per cent of the budgeted borrowings of Rs 1,66,230 crore (Rs 1,662.30 billion) for this fiscal.

Redemption of G-secs rose by around 48 per cent to Rs 32,118 crore (Rs 321.18 billion) till December 26 as compared to Rs 21,715 crore (Rs 217.15 billion) in the previous year period, PNB Gilts said.

In the case of 364 day T-Bills, redemptions were up by about 34 per cent to Rs 20,033 crore (Rs 200.33 billion) till the last week of December as against Rs 15,000 crore (Rs 150 billion) in the year-ago period.

The Centre's net borrowings through G-secs fell by over 9 per cent to Rs 77,316 crore (Rs 773.16 billion) during the latest reported period as compared to Rs 85,285 crore (Rs 852.85 billion) during the year-ago period.

The net mop up through 364 day T-Bill fell drastically to mere Rs 3 crore (Rs 30 million) till December 26 as compared to as high as Rs 5,033 crore (Rs 50.33 billion) in the previous year period.

The Centre also plans to mobilise Rs 5,000 crore (Rs 50 billion) through the issuance of dated securities in the 10-14 year segment during the first week of January 2004.

"Given comfortable liqudity and buoyant sentiments, the auction should sail through easily," PNB Gilts hoped.

It said the short and medium term outlook for the debt market was optimistic, hoping "buoyancy in sentiments" due to expectations of provident fund investments and introduction of standing deposit facility in January.