Implying that the Centre's finances were comfortable and fiscal situation was set to improve, the government's gross borrowings fell by over 4 per cent to Rs 93,030 crore (Rs 930.30 billion) till September 20, but uncertainty on the liquidity impact of Resurgent India Bonds redemption still prevailed, PNB Gilts said on Tuesday.

The gross borrowings so far constituted 56 per cent of the budgeted Rs 1,66,230 crore (Rs 1,662.30 billion) and was as high as Rs 97,032 crore (Rs 970.32 billion) in the year-ago period, PNB Gilts said in its latest report on the government securities market.

"The government finances are comfortable and with the recovery of economy, the fiscal situation is likely to improve further," it said, adding, however, "in the short run, uncertainty on the liquidity impact of RIBs still prevails."

This is despite repeated assertions by the Reserve Bank of India that redemption of RIBs would be done smoothly on time and without causing any impact on domestic liquidity, the primary dealer in G-secs said.

Reasoning for the "comfortable" government finances, PNB Gilts said "receipts on account of Centre-State debt swap and advance tax payments might have contributed to it."

Though the G-secs prices opened on a bearish note on fears of possible liquidity tightening after advance tax payments and uncertainty about liquidity impact of RIB redemptions, it said, "RBI's moves to reduce NRE deposits rates raised expectations of a repo rate cut in the forthcoming monetary policy."

With redemptions of Rs 25,716 crore (Rs 257.16 billion), net borrowings of the Centre stood at Rs 67,314 crore (Rs 673.14 billion) till September 20, which was marginally lower than Rs 67,877 crore (Rs 678.77 billion) in the corresponding period in 2002-03.

The net borrowings so far represent about 63 per cent of the budget estimate of Rs 1,07,194 crore (Rs 1,071.94 billion) for this fiscal, PNB Gilts said.

The actively traded stock was the government securities having 6.05 per cent coupon and maturing on 2019, followed by 7.46 per cent interest bearing G-secs with maturity on 2017 and 8.07 per cent GOI 2017.

Maharashtra, Madhya Pradesh and West Bengal raised Rs 955 crore (Rs 9.55 billion) by issuing 10-year stock, while the Centre mopped up Rs 1,000 crore (Rs 10 billion) through auction of the 364-day treasury bills.