India to set Oct-Mar borrowing schedule on 29 Sep

India to set Oct-Mar borrowing schedule on 29 Sep

New Delhi: India will sell Rs1.58 trillion ($32.5 billion) of bonds in the second half of 2009-10 (April-March), with a timetable to be set by the finance ministry and central bank on 29 Sept, a finance ministry official said on Tuesday.

While total gross borrowing of Rs4.51 trillion in 2009-10 is unchanged from July’s budget, the split between the first and second halves of the fiscal year is slightly different because of a cancelled Rs120 billion auction in early August.

Half of the cancelled auction would be made up before the end of September — this Friday’s auction is Rs40 billion larger than had been scheduled — and the rest would be made up between October and March, the official informed.

“The meeting will discuss the borrowing schedule for the second half and whether the borrowing has to be front loaded," said the official, who did not want to be identified.

The official said that the government wanted to finish its record market borrowing programme by the first week of March 2010.

Concentrating federal borrowing in the early months of the October-March period would make room for state borrowing.

The official said that the states were expected to raise about Rs1.6-1.7 trillion in 2009-10, with about 60% of it to be raised during the January-March quarter.

India’s fiscal deficit is estimated at 6.8% of the gross domestic product (GDP) in 2009-10.

Asked about talk of an increase in the amount of bonds banks can put in hold-to-maturity (HTM) accounts, where they do not have to be marked-to-market, the official said that it would increase appetite for government securities in the market.

However, any decision would be made by the central bank," he said.

The official said that the demand in sectors such as autos and consumer goods should get a boost as government employees get paid arrears of Rs180-200 billion this month following a back-dated pay rise.