Bond sales likely to surge in next year on higher debt repayments

By Ruchi Bhatia and Siddhartha Singh 

India’s bond sales are likely to surge in the next fiscal year on account of higher debt repayments, according to a government official.  

Sales in the fiscal year starting April 1, 2025, are likely to be higher on redemption of debt issued during the Covid years, the official, who declined to be identified, told reporters. The administration is likely to keep borrowing unchanged for the remainder of the current fiscal year as the spending is likely to pick up, the official said. 

 

Prime Minister Modi’s administration is slated to borrow Rs 14.01 trillion ($168 billion) in the fiscal year ending March 2025. 

 

Higher bond sales may hurt sovereign bonds that have been among Asia’s best performers this year, largely supported by foreign inflows spurred by inclusion into global indexes. 

 

The yield on the 10-year bond rose one basis point to close at 6.82 per cent on Monday.

 

The government doesn’t expect any expenditure shortfall in the current fiscal year to March, and is encouraging departments and states to speed up spending, the official said.

 

The administration has bought back 800 billion rupees of debt and switched 1.35 trillion rupees of debt to longer maturity in efforts to smoothen the maturity profile for the next year, the official said.