India may cut record FY23 market borrowing plan by up to INR600bn – sources

  • The Indian government may reduce by as much as INR600bn its planned record market borrowing of INR14.95tr (USD200bn) for FY23, two government sources said.
  • The sources said the latest bond switch conducted by the government with the central bank at the end of Jan 22 was not factored into budget estimates released on 1 Feb 22.
  • The reduction could be announced before the end of Mar 22, the sources said requesting anonymity because of the sensitivity of the matter.
  • India’s 10-year bond yield continued to rise on 2 Feb 22, hitting a two-and-half year high, largely in reaction to the latest borrowing plan, which was over 40% higher than the borrowing slated for FY22.
  • Markets had been expecting borrowing of INR12tr-INR13tr for FY23. India switched nearly INR1.2tr of government bonds on 28 Jan 22 with INR636.5bn of debt maturing in FY23.
  • “The switch has not been factored. It would lower the borrowing for the current year,” one of the official said.
  • A second official said the switch could lower the FY23 borrowing by as much as INR500bn-INR600bn. The officials also said that they expect RBI to intervene in the market to help smoothen the borrowing for FY23.

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