By -
Jul 7, 2014
India’s 10-year bond yield was near a
two-week low on optimism the government will unveil steps to
improve public finances in this week’s budget.
Finance Minister Arun Jaitley will keep the fiscal deficit target at 4.5 percent of gross domestic product in the July 10 budget, unchanged from what the previous administration estimated in February, according to the median forecast in a Bloomberg News survey. Prime Minister Narendra Modi will seek to borrow about 6 trillion rupees ($100.2 billion) in the year through March 2015, little changed from the interim budget’s goal of 5.97 trillion rupees, the survey showed.
“Markets are anticipating that the overall tone of the budget will focus on fiscal consolidation,” said Harish Agarwal, a fixed-income trader in Mumbai at FirstRand Ltd. “Investors are expectedly in a wait-and-watch mode ahead of the key event.”
The yield on the 8.83 percent notes due November 2023 was at 8.66 percent as of 10:10 a.m. in Mumbai, little changed from July 4 and a two-week low reached on July 2, according to the central bank’s trading system. The rate dropped eight basis points last week after a three-week advance.
The government’s recent decisions to raise fuel prices and rail fares have spurred speculation it will seek to improve finances by boosting revenue and reducing energy subsidies. India can’t afford populist policies and needs fiscal discipline for sustainable economic growth, Jaitley said last week.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, rose one basis point, or 0.01 percentage point, to 8.35 percent, data compiled by Bloomberg show.
To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net
To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Simon Harvey, Andrew Janes
Finance Minister Arun Jaitley will keep the fiscal deficit target at 4.5 percent of gross domestic product in the July 10 budget, unchanged from what the previous administration estimated in February, according to the median forecast in a Bloomberg News survey. Prime Minister Narendra Modi will seek to borrow about 6 trillion rupees ($100.2 billion) in the year through March 2015, little changed from the interim budget’s goal of 5.97 trillion rupees, the survey showed.
“Markets are anticipating that the overall tone of the budget will focus on fiscal consolidation,” said Harish Agarwal, a fixed-income trader in Mumbai at FirstRand Ltd. “Investors are expectedly in a wait-and-watch mode ahead of the key event.”
The yield on the 8.83 percent notes due November 2023 was at 8.66 percent as of 10:10 a.m. in Mumbai, little changed from July 4 and a two-week low reached on July 2, according to the central bank’s trading system. The rate dropped eight basis points last week after a three-week advance.
The government’s recent decisions to raise fuel prices and rail fares have spurred speculation it will seek to improve finances by boosting revenue and reducing energy subsidies. India can’t afford populist policies and needs fiscal discipline for sustainable economic growth, Jaitley said last week.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, rose one basis point, or 0.01 percentage point, to 8.35 percent, data compiled by Bloomberg show.
To contact the reporter on this story: Shikhar Balwani in Mumbai at sbalwani@bloomberg.net
To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Simon Harvey, Andrew Janes
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