Spike in gilt yields under watch
government bond yields and will take «appropriate» action, including delaying planned treasury auctions, if they rise beyond tolerance levels, a government official said.
The benchmark 10-year G-sec yield was trading at 7.38% on Monday, a tad lower than a seven-month high of 7.40% it hit on October 9.
The global financial markets have been roiled by the surge in the US bond yields with the 10-year benchmark crossing the 5% psychological mark for the first time since 2007.
«The recent spike in yields is because of various factors. It is not much of a concern at this point in time.
If they go beyond tolerance levels, we will decline the auction...We will take an appropriate call,» the official said but declined to specify the tolerance level.
In March 2021, the Centre had cancelled one government securities auction to cool yields. It had also cancelled an auction in February 2022 amid rising yields.
«We are keeping a close watch,» the official said.
The robust small savings collection could give the government cushion, allowing it to cut market borrowings, if needed. The Centre plans to borrow ₹6.55 lakh crore from the market via dated securities in the second half (H2) of the 2023-24 financial year (FY24) to go with the ₹8.88 lakh crore raised in H1.
The borrowing is in line with the Budget estimate for FY24.
Comfortable fiscal situation
The government is confident of meeting the 5.9% fiscal deficit goal for FY24, the official added. The government could, however, reprioritise its spending should the latest geo-political conflicts flare up, he added.
Overall, the revenue mop-up and expenditure remain in sync with the targets and revenue shortfall under one head could be made up by surplus in another, he added.
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