Finance & Stock Market
Budget offers lower borrowing plan, 10-year bonds suffer 8-month steepest fall of 8bps
By - 01 Feb 2024 09:15 PM
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India's 10-year bond yield fell 8 basis points, making its steepest fall in the last eight months, after the government surprised with a lower-than-expected borrowing programme in its Union Budget for FY25. The 10-year bond yield ended at 7.07 percent, down 8 basis points, its maximum fall since May 3, 2023, from its previous close of 7.14 percent. The government announced Rs 14.13 trillion in the fiscal year starting April 1. A Moneycontrol poll estimated around Rs 15-16 lakh crore for the fiscal year 2024-25, with net borrowing estimated at Rs 11.50-11.75 lakh crore. The net borrowings, adjusted for maturities, are planned at Rs 11.75 trillion for the next fiscal year, according to Finance Minster Nirmala Sitharaman. Analysts said the borrowing programme is lower than expected as India prepares for big foreign inflows on global index inclusions. In FY24, the Centre declared the gross market borrowing at Rs 15.43 lakh crore, marking an 8.6 percent increase from the borrowing in 2022-23. "While the net borrowings for FY25 are in line with our expectations, lower-than-expected gross borrowings possibly could be attributed to the government utilising its surplus from the GST compensation fund (a public fund) to pay off their debt for FY25 to RBI or market participants, leading to a difference of Rs 1.24 trillion between actual total redemption and the (lower) market loan redemption taken in the budget. |
