Budget 2022: Bond yields shoot up as govt resorts to record borrowings

The RBI, which stopped buying bonds to prevent liquidity infusion, may have to support the borrowing again

Bond yields rose sharply in response to the higher than expected gross market borrowing numbers of the Union government.

The 10-year bond yield closed at 6.85 per cent, from its previous close of 6.68 per cent after the Union Budget pegged the budgeted gross market borrowing number for the next fiscal at Rs 14.95 trillion. 

The government will also be tapping small savings of Rs 5.67 trillion in the next fiscal, as against Rs 6.78 trillion in the current fiscal, to bridge its fiscal deficit of 6.4 per cent of the gross domestic product (GDP).

The net borrowing will be