Increase in small savings to bring down govt borrowing: R Gopalan

An increase in small savings collections is likely to reduce pressure of government borrowing via dated securities and treasury bills in the current fiscal year, the economic affairs secretary R Gopalan told CNBC TV18 in an exclusive interview today.

Earlier this month, the government raised interest rates on small savings investment schemes through post offices by up to 0.5 percent.While a 10-year National Savings Certificate, or NSC, will now yield 8.9 percent, the popular Public Provident Fund (PPF) will fetch 8.8 percent. The savings rate will, however remain unchanged at 4 percent.

“I am sure that pressure on the markets for dated securities as well as bills will go down,” R. Gopalan said, adding the government would try to find ways and means to bring down the market borrowings close to the level of last fiscal year.

Gopalan also indicated at some clarity for foreign institutional investors with regard to the general anti-avoidance rules. Defending the government’s stance on GAAR by saying that India was not the only country to have such a rule, Gopalan said the government was working on an easy, transparent mechanism to implement GAAR.He added that specifics on GAAR will be notified on May 7-8, once the Finance Bill is passed in Parliament.

For the full interview, watch the video above.