Budget 2020: Markets brace for Rs 8-trillion gross borrowing in FY21

Bond traders say the market wouldn't be perturbed if the government is not able to keep the fiscal glide path in mind and overshoots its targets by 0.5 percentage points

The bond market expects the government to announce heavy borrowing in the next fiscal year, but the numbers could be masked through off-balance sheet items, such as enabling public sector companies to raise government-serviced bonds.

“Going into the Budget, the broad consensus of market participants for 2020-21 (FY21) fiscal deficit is at 3.5 per cent, which would translate into gross borrowings of Rs 7.7-7.9 trillion. A credible Budget which throws up anything below these numbers would be a positive surprise for the market,” said B Prasanna, head of global markets and proprietary trading group, ICICI Bank.

Bond traders say the market wouldn’t