The finance ministry is likely to shell out an additional support of about Rs 1,000 crore (Rs 10 billion) for the assured return schemes of the Unit Trust of India during 2002-03, compared with the budgeted support of Rs 1,511 crore (Rs 15.11 billion).

The amount is likely to be provided in the third and final supplementary demand for grants, which will be tabled by the finance ministry in Parliament along with Budget 2003-04 on February 28.

However, by matching savings on other heads the ministry will not have to make provision for any additional cash outgo.

In the second supplementary demand for grants cleared in the winter session of Parliament, the finance ministry had made a provision for Rs 1,949 crore (Rs 19.49 billion) for UTI, of which Rs 1,511 crore (Rs 15.11 billion) was meant to meet the estimated liability on the government due to the shortfall in assured return schemes.

The balance was meant to meet the shortfall between the assured repurchase price and the net asset value of Unit Scheme-64.

As per the UTI package approved by the Union Cabinet, the Centre had agreed to meet the difference between the net asset value and the repurchase price of US-64, as well as the redemption pressure on its monthly income plans.

In the second supplementary demand, the projected support for the monthly income plans was considered adequate, and the finance ministry has already shelled out more than Rs 700 crore of it.

However, according to the ministry's latest projections the amount required to meet the redemption pressure will have to be raised by another Rs 1,000 crore.

The ministry is also concerned about the level of cash support that will be required by UTI to meet the demand on maturity of the US-64 scheme at the end of June 2003.

According to official sources, the sum is expected to touch Rs 6,000 crore (Rs 60 billion). This will be one of the major provisioning under the expenditure Budget for 2003-04 for the finance ministry.

In addition, the ministry may have to provide Rs 3,000 crore for the issue of bonds. However, these being contingent liabilities for the government, will not be reflected in the Budget figures for 2003-04.

While the ministry is hopeful that there will be some savings on this head, the provisioning reflects the commitment of the government that the mutual fund should not face any redemption problems.