Modi govt considers farm-relief package and ends up spooking bond traders

The government has repeatedly said it will meet its budget shortfall target of 3.3 per cent of GDP for the current financial year

Fiscal worries are back to haunt India’s sovereign bonds just after they posted the best quarter in four years.

Prime Minister Narendra Modi’s party, which recently met with electoral losses in key states, is said to be preparing to unveil a farm-relief package ahead of general elections due by May. The prospect of substantial aid for farmers at a time when the nation’s tax and asset sales collections are lagging estimates is stoking fears that India may miss its fiscal deficit target.

“Fiscal concerns are again taking center-stage,” said Badrish Kulhalli, head of fixed income at HDFC Standard Life Insurance Co. “Any