The government on Monday cancelled Rs 12,000 crore bond auctions, lowering its market borrowing programme for the current financial year in its bid to contain the fiscal deficit at 5.3 percent.
With this, the total market borrowing by the government in the current fiscal would come down to Rs 5.58 lakh crore from Rs 5.70 lakh crore as envisaged in the 2012-13 Budget.
"On review of the government's cash position and funding requirement, it has been decided, in consultation with Reserve Bank of India (RBI), to reduce the government market borrowing through dated securities by Rs 12,000 crore for the current financial year," the Finance Ministry said in a statement.
The auction for dated securities, worth Rs 12,000 crore, scheduled on February 22 has been cancelled, it added.
The Government has already borrowed Rs 3.7 lakh crore in the first half ending September 30, which is 65 percent of the total planned borrowing.
The front-loading of borrowing was done as part of its strategy to make available capital to the private sector in the last six months of 2012-13.
Finance Minister P Chidambaram had in November 2012 raised the fiscal deficit projection for the current financial year to 5.3 per cent, from 5.1 per cent estimated in Budget.
The government has already asked the Ministries to curtail their non-plan expenditure and avoid spending rush in the January-March quarter.
Its cash position has improved with flow of over Rs 14,000 crore through disinvestments alone in February. Uptil now the government has collected around Rs 21,500 crore from PSU stake sales as against a fiscal target of Rs 30,000 crore.
Chidambaram plans to bring down fiscal deficit to 4.8 per cent of GDP in 2013-14 fiscal.