NEW DELHI: India will keep its federal borrowing for October to March close to target amid fiscal pressures, while aligning the programme with the central bank’s effort to drain record cash netted from the nation’s vast diaspora.
The government will raise 7.9 trillion rupees (US$82.4bil) in the second half of the financial year ending March 31, 2027, according to a statement Friday.
It will reduce the share of three to five-year bonds to 19% from 23.5% in the first half, while the notes maturing in 30 years or more will increase to 28% from 24.9%.
The drop in the share of shorter-maturity bonds takes into account the sale of such paper by the central bank under its liquidity-draining operations, according to Anuradha Thakur, secretary at the Department of Economic Affairs.
The Reserve Bank of India (RBI) has announced bond sales worth one trillion rupees to drain banking liquidity, which ballooned after it received a record US$133bil in diaspora deposits under a concessional programme to support the rupee.
The decision to increase the long-end supply is a bit of a surprise, but it creates some room in shorter tenors to absorb additional issuance from the RBI’s liquidity-draining bond sales, according to Abhishek Upadhyay, economist, ICICI Securities Primary Dealership. — Bloomberg
