The Centre will borrow another Rs 5.03 lakh crore in the second half of the financial year, assuaging bond market concerns of large additional sovereign debt raising.
The Reserve Bank of India Monday released the plan for government borrowing between October and March. In the first half, it had planned to borrow Rs 7.24 lakh crore.
“Second half government borrowing did not spring any negative surprise barring a negligible increase in market borrowing,” said Madan Sabnavis, chief economist at CARE Ratings. “It also reflects that telecom relief package did not dent the fiscal condition. Bond market was apprehensive but should now calm down.”
In the past three trading sessions, the benchmark bond yield rose seven basis points to close at 6.21 percent Monday traders factored in higher than usual market borrowing, particularly after New Delhi had granted a moratorium on unpaid dues by telecom players.
Total government borrowing was earlier pegged at Rs 12.05 lakh crore, which now is estimated at Rs 12.27 lakh crore. Market dealers were apprehensive of an additional borrowing up to Rs 1 lakh crore due to the telecom relief package.
“However, if there is any fiscal gap toward the end of the year, that could well be managed by rolling over Treasury Bill maturities,” said Sabnavis.
In the second half, the share of floating-rate bonds increased compared to the first half of the year. Other categories of proposed bond sales increased a tad by about Rs 1,000 crore in each category.
In the next three months, Mint Road will aim to sell Rs 2.60 lakh crore worth of Treasury Bills, or short-term government papers with up to one-year maturities. The kitty was planned for Rs 2.21 lakh crore in the July-September quarter.
Source: Economic Times