The Indian government is expected to say it plans to borrow 5.3 trillion rupees ($106 billion) in the fiscal year starting on April 1, up from a scheduled 5.1 trillion in the current year, when it releases its budget on March 16, a Reuters poll showed. However, that figure could rise sharply as the year progresses, many of the 11 traders polled said.
The government originally said in its budget for the current year that it planned to borrow 4.17 trillion rupees but was forced to increase that as economic growth waned and tax receipts fell short of expectations.
The government had also hoped to raise $8 billion by selling stakes in state-run companies, but was thwarted by weak markets and resistance from opposition politicians and unions.
In the end, just $2.75 billion was raised, including receipts from the sale of a 5 percent stake in Oil and Natural Gas Corp last week.
The poll also showed that, on average, traders expect the benchmark 10-year bond yield to fall to 7.9 percent by the end of September.
The 10-year yield is expected to fall to 7.74 percent by the end of 2012/13, according to the nine traders who offered forecasts.
The 10-year bond was yielding 8.24 percent on Tuesday.
Most traders who responded to the poll said they assumed that the Reserve Bank of India would start to cut interest rates at the beginning of the new fiscal year. Heavy government borrowing would likely limit a sharp rally in bond prices, they said.
Comments
Comments are closed.