Yes Bank expects fiscal slippage at 5.5 percent (pct) of GDP in the current fiscal year versus 5.1 pct budgeted,which would need additional financing of about 400 billion rupees.
Bank says extra borrowing will not be via dated securities with funding via government’s surplus cash balance and t-bills issuance.
However,if fiscal slippage is closer to 5.8-6 per cent,government borrowing via bonds could be around another 300 billion rupees.
Bank says open market operations (OMO) support from RBI could be to the tune of 800 billion rupees,likely beginning in November.
India’s benchmark 10-year bond yield likely to trade in 8-8.25 percent band in near term with a move towards 7.75 percent expected in March quarter.