Analysts peg FY14 net borrowing below Rs 5 lakh crore

Express faith in Chidambaram's fiscal discipline, RBI may need to carry out Rs 1 lakh crore of OMOs to meet govt demand

A growing chorus of analysts expect India to keep net borrowing below Rs 5 lakh crore. Analysts have put faith in Finance Minister P Chidambaram's fiscal discipline, with budget projections factoring in a 4.8% deficit, similar to the official forecast.

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

Goldman Sachs estimates net borrowing at Rs 4.91 lakh crore with gross at Rs 5.86 lakh crore.

RBI may need to carry out Rs 1 lakh crore 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% range.

Credit Suisse has an estimate of Rs 4.7 lakh crore 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 Rs 4.2-4.4 lakh crore as it estimates Rs 600 billion of the current cash surplus going into funding the FY14 deficit.