BOND YIELDS SURGE ON HIGH BORROWING

MUMBAI:

Yields on government bonds surged on Monday, after the Union government’s Friday decision to increase borrowings by over 50%. Yield on the benchmark 10-year bond rose 20 basis points, the biggest jump since 8 February 2017, to close at 6.167%, from the previous close of 5.971. As the country battles a pandemic with a stringent lockdown that has choked the economy, the government has raised its gross borrowing programme for the fiscal from the budgeted ₹7.8 lakh crore to ₹12 lakh crore. Half of this will be raised by the end of September. Nomura estimates India’s budget deficit to widen to 7% of GDP versus targeted 3.5%.