Why Borrow? reward yourself

The financial markets were surprised when the government stated that due to projected shortfall in the disinvestment target and absence of 3G auctions, it intended to borrow more from the markets to meet its needs. There is also an anticipated shortfall from small savings collections. Promptly, the markets moved and interest rates on government debt went up. This has increased costs for everybody across the spectrum and also depreciated the value of the government securities held by banks as part of the SLR portfolio, forcing them to put up more capital and reducing their lending capacity. 

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