The government will borrow less, it seems, with their “cash situation” under control. The total reduction will be Rs. 21,000 cr.

Long term bonds will see a drop of Rs. 10,000 cr. in borrowing in the last five auctions.

Here’s the original schedule of borrowing:

image

It seems this will be corrected, as seen in a Press Note.

Now each of these are down to 12,000 cr., and that’s a cut of Rs. 2,000 per instance, and there are five instances. This is a total reduction of Rs. 10,000 cr. in borrowing.

Similarly, T-Bills which were supposed to draw Rs. 86,000 cr. in the last six auctions (weekly) are dropping to just Rs. 75,000 cr. , a drop of Rs. 11,000 cr.

The two changes total Rs. 21,000 cr. of lower borrowing.

This should be positive for the bond market. Yields should drop on the new 10 year to below 8.55% (market is closed today). However, this may still be temporary; there is still the remaining six months of borrowing, much of which will have the impact of the Food Security Bill and the Monsoon. But 21,000 cr. is a lot of money, and in the near term, this remains quite positive.

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