Budget 2019: Traders have a challenge spotting govt's hidden, growing debt

Bond traders have one question as they head into India’s budget on Friday -- how big are the off-balance sheet borrowings?

There’s growing expectations that the government will do an accounting sleight of hand to keep its deficit in check: borrow via state-owned firms and issue special bonds. That’s a concern since total public sector borrowings have reached as much as 9% of gross domestic product by one estimate.

“Extra-budgetary resources are exerting pressure on corporate bond yields because the government is channelizing a lot of borrowings through state-run entities,” said Shailendra Jhingan, chief executive at ICICI Securities Primary Dealership