Analysts peg net borrowing below 5 trillion rupees

Thu Feb 21, 2013 12:51pm IST

A Kashmiri shopkeeper displays a garland made of Indian currency notes at a market in Srinagar May 20, 2008. REUTERS/Fayaz Kabli/Files

A Kashmiri shopkeeper displays a garland made of Indian currency notes at a market in Srinagar May 20, 2008.

Credit: Reuters/Fayaz Kabli/Files

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Reuters Market Eye - A growing chorus of analysts expect India to keep net borrowing below 5 trillion rupees. Analysts have put faith in Finance Minister P. Chidambaram's fiscal discipline, with budget projections factoring in a 4.8 percent deficit, similar to the official forecast.

That may trigger a rally in bonds in 2013, with yields having potential to fall to 7.25 pct.

Goldman Sachs estimates net borrowing at 4.91 trillion rupees with gross at 5.86 trillion rupees.

RBI may need to carry out 1 trillion rupees of OMOs in FY14 to meet government demand, anchor bond yields, bank says. It has a target for average 10-year bond yield for FY14 in 7.25-7.50 percent range.

Credit Suisse has an estimate of 4.7 trillion rupees for net borrowing, with the possibility of an upside if the government decides on buybacks.

Standard Chartered estimates net borrowing to be on the lower side of around 4.2-4.4 trillion rupees as it estimates 600 billion rupees of the current cash surplus going into funding the FY14 deficit.

(Reporting by Subhadip Sircar)

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