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RBI says higher borrowings not to impact interest rates

The Reserve Bank of India said on Monday it saw no pressure on interest rates due to an overshoot in the current year's government borrowing programme.

"There is no problem in borrowings, the interest rates have come down, there are no concerns," RBI Governor Bimal Jalan told reporters after a meeting with Finance Minister Yashwant Sinha.

The government has raised Rs 1.22 trillion through market borrowings and private placements with the central bank so far this fiscal year against a target of Rs 1.19 trillion.

Jalan said the increased borrowings were not a cause of concern from a debt or monetary management point of view.

"Not from the point of view of debt management or interest rate management or monetary management," he said, when asked whether the overshoot was worrying the RBI.

Jalan said he was comfortable with the current conditions in the foreign exchange market.

"We are very comfortable, reserves are rising," he said. "We like it, no problems."

The central bank governor said that India is likely to finish the current year with a growth rate of five to six per cent.

GDP grew 5.2 per cent in 2000-01 (April-March).

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