India to ensure record borrowing plan doesn't disrupt markets: Official

India's bond markets have been battered by hefty government borrowings, with investors expecting a record ₹30 trillion of federal and state government debt supply in the next fiscal

The Indian government will use various instruments, including bond switches, to ensure its record borrowings in the fiscal year starting ‍April do not unsettle the ​market or push up yields, a senior finance ministry official said.

The borrowing plan will make sure rates are competitive and the market is not "disturbed," Economic Affairs Secretary Anuradha Thakur told Reuters in an interview on Tuesday.

"Healthy markets are equally important for us," she said, adding that uncertainty around the US-India trade deal has ended, lifting investor sentiment.

With the deal ​in place, "foreign portfolio investment sentiment will change...and the rupee has also started appreciating."

 

India's bond markets have been battered by hefty government borrowings, with investors expecting a record ₹30 trillion ($331.81 billion) of federal and state government debt supply in the next fiscal, at a time when the central bank's rate-cutting cycle is nearing its end.

Government bond yields determine the cost of borrowing for firms and households.

New Delhi plans to borrow a record ₹17.2 trillion in 2026-27, Finance Minister Nirmala Sitharaman said in her budget speech on Sunday, about 17 per cent higher than the current fiscal's ₹14.61 trillion.

The benchmark 10-year bond yield jumped to a one-year high on budget day, but dipped a day later after the announcement of the trade deal.

The government's net borrowing, which excludes repayments for past debt, will rise to ₹11.73 ‌trillion in the next fiscal from ₹11.33 ​trillion for the current year.

The borrowing calendar, managed by the central bank, will use a mix of switches, buybacks and open market operations to repay past debt of ₹5.5 trillion, balancing market developments with lower borrowing costs, Thakur said.

New Delhi typically conducts ‍bond switches and buybacks to lower the supply of debt to the market.

The Reserve Bank of India, which sets the supply of money in the economy, buys or ‍sells ‌bonds through open ​market operations to influence banking system liquidity. It is ‍the debt manager for the government.

India has set a ₹2.5 trillion target for bond switches ‍in ‍2026-27, while not specifying ‌any buyback goal.