Indian Govt issues INR 10,000 crores worth Oil Bonds

March 23/09 - The Special Bonds are being issued at par to Indian Oil Corporation (Rs 5812 crore), Bharat Petroleum Corporation Limited (Rs 2144 crore) and Hindustan Petroleum Corporation Limited (Rs 2038 crore) on March 23, 2009, Monday.

Investment in these special bonds by the banks and insurance companies willnot be considered as eligible as an investment in government securities for their statutory requirements.But such investment by the insurance companies will be eligible to be reckoned as investment under "other Approved Securities" category as defined under Insurance Regulatory and Development Authority (Investment) Regulations, 2000.

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The investment by the Provident Funds, Gratuity Funds, Superannuation Funds, etc. in these special bonds will be treated as an eligible investment under the administrative order of the Ministry of Finance. The Special Bonds will be transferable and eligible for repo transactions.

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RBI - Finances to deteriorate further

With the government coming out with financial incentives for the industry, the Reserve Bank has said central finances will further deteriorate during the second-half of the year on account of the impact of financial turmoil on the Indian economy.

"While expenditure is slated to increase in the coming months, growth of tax revenue is likely to decelerate with the expected moderation in real economic activities following the global financial meltdown," RBI said in its monthly bulletin.

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"Finances in the first-half indicate deterioration in all key deficit indicators, both in the absolute term as well as per centage of GDP," it said, adding the "pressure" on deficit indicators would continue during the remaining part of 2008-09.

The government has come out with a fiscal stimulus package of over Rs 30,000 crore which will have an adverse bearing on central finances. This will be an addition to over Rs 1 lakh crore the government has sought during the first batch of supplementary demands for grants raising the government expenditures.

With the industrial production as well as exports recording a negative growth of 0.4 per cent and 12.1 per cent respectively in October, the government may come out with the second stimulus package increasing further pressure on finances.

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Referring to the performance of the first half, the RBI report said, "As per cent of the Budget estimates, both revenue deficits and fiscal deficits were higher mainly due to rise in revenue expenditure, both non-plan and plan."

RBI has already indicated that it would review the economic growth estimate at its quarterly monetary policy to be announced on January 27.

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with extracts from www.economictimes.com