MUMBAI: The yield on the 10-year bond on Monday surged 26 basis points--the most in three years--following the government's announcement of higher borrowing.
At 1010 am, the yield on the 10-year bond was at 6.222%, up from its previous close of 5.971%. Late on Friday, the Centre said it will borrow ₹12 trillion in the current fiscal, 54% more than budgeted.
Half of this will be raised by the end of September. The increase in borrowing signals a major slippage in fiscal deficit amid rising pressures on both revenue and expenditure because of the covid-19 pandemic. "This has been necessitated because of the imminent need to deliver an appropriate fiscal package to address the looming covid-19- related slowdown", sad Centrum Economic research