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Prime Minister Narendra Modi’s administration will borrow 11.4 trillion rupees ($132 billion) for the fiscal year that begins April 1, lower than the 11.6 trillion rupees for the current year, according to the median estimate of 20 economists polled by Bloomberg. Gross borrowing, which includes repayments, may rise slightly to 14.7 trillion rupees.
Bond yields slid to a fresh three-year low after the central bank unleashed a raft of steps late Monday to infuse nearly $18 billion of liquidity in the system. Yield on the 10-year bond dropped as much as six basis points to 6.63%.
The borrowing announcement will be made during the Feb. 1 federal budget, with the financial system facing a cash squeeze and foreign investors selling out of India’s markets. Finance Minister Nirmala Sitharaman is tasked with reviving growth, maintaining fiscal discipline, and win a sovereign ratings upgrade. Most economists predict she’ll stick to the roadmap of narrowing the budget deficit to 4.5% of the gross domestic product in the next fiscal year.
“The fiscal consolidation should continue to bring down the deficit to more sustainable levels and reduce the overall debt pile,” said Pankaj Pathak, fixed-income fund manager at Quantum Asset Management Co. “This is a favorable environment wherein the supply of bonds is
