Liquidity state of Indian Government’s finances
The Indian government has acomplia blogs a cash balance of around Rs 480 billion with the central bank currently and will spend it gradually rather than at one go, three sources with direct knowledge of the issue said. The Reserve Bank of India (RBI) is ready to expand liquidity support to the system if the need arises, a source said late on Tuesday, adding that the bank has its own estimate of the expected outflow as a result of advance taxes as well as payment towards the broadband wireless access (BWA) spectrum.
Concerns of cash tightening sharply during this period has surfaced despite the RBI allowing banks to borrow an additional 0.5 per cent of their deposits from the central bank through the daily liquidity support window till July 2 due to the slow pace of government spending.
Traders in the bond market are expecting about Rs 300 billion to flow out of the system as advance tax payment on June 15 and another 350 billion rupees through BWA spectrum sale at the same time. About 300 billion rupees of this money may be used to repay does propecia really work the government’s loans from the RBI under Ways and Means Advances, a central bank official told Reuters on condition of anonymity.
Spending of cash surpluses by the government will bring the money back to the banking system, easing the current liquidity tightness which pushed the overnight money rates to over 5 per cent from 3.75 per cent two weeks ago.
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Source: [Economic Times India Times]
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