India Cuts Planned Bond Sales by 6% for Second Half as Cash Inflows Rise

India cut its planned debt sales for the second half of the fiscal year by 6 percent as revenue from taxes and phone license fees bolstered its finances.

The federal government plans to raise 1.63 trillion rupees ($35.7 billion) selling bonds in the six months ending March 31, lower than an earlier plan for 1.73 trillion rupees, Finance Secretary Ashok Chawla told reporters in New Delhi today. India will sell 100 billion rupees to 110 billion rupees of debt every week and may complete its borrowings by the second week of February, he said.

“Looking at the projected cash flows and funding requirements, it seems it will not be necessary to raise the whole amount,” Chawla said.

India expects revenue from government asset sales, auction of third-generation mobile-phone spectrum and tax collections to help it cut the deficit by the sharpest in 19 years. Finance Minister Pranab Mukherjee aims to narrow the government’s budget deficit to 5.5 percent of gross domestic product by March 31 from 6.9 percent in the previous year.

Benchmark bonds gained, pushing 10-year yields to the lowest level in more than a month. The yield on the 7.8 percent note due 2020 fell 4 basis points, or 0.04 percentage point, to 7.90 percent as of the 5 p.m. close in Mumbai, according to the central bank’s trading system.

The Reserve Bank of India, which conducts debt sales for the government, will manage the borrowings in a non-disruptive manner while ensuring adequate funds are available for companies, Deputy Governor Shyamala Gopinath said in New Delhi.

The government has borrowed 2.62 trillion rupees this fiscal year that began April 1, according to data compiled by Bloomberg, while the rest for the first half will be completed tomorrow when it sells 110 billion rupees in debt.