Govt borrowing target no cause for disappointment: StanChart

After adjusting for a buyback of Rs 50,000 cr, gross borrowing is at Rs 5.79 lakh cr only 4% higher than in the current fiscal

Standard Chartered says India's debt investors "need not be disappointed" with the government's FY14 gross borrowing target of Rs 6.29 lakh crore announced on Thursday, which had sent bonds to their worst day in seven months in the previous session.

After adjusting for a buyback of Rs 50,000 crore, the gross borrowing is at Rs 5.79 lakh crore, only 4% higher than in the current fiscal ending in March, StanChart says.

The bank adds India had not budgeted for any cash drawdown in FY14, despite a cash surplus estimated at Rs 1 lakh crore, which the government may have retained as a cushion should revenues fall below its estimates.

"We believe such a large cash surplus has the potential to surprise the markets positively," StanChart says.

Easing inflation and rate cut hopes should be positive for bonds, the bank adds, recommending investors hold 10-year bonds.