Modi govt's enhanced market borrowing plan may roil the bond market

The pandemic has ravaged revenues of both the federal and state governments and pushed the economy toward the worst contraction on record

Indian Prime Minister Narendra Modi’s government expanded its market borrowing plan for a second time this year to an unprecedented 13 trillion rupees ($177 billion), a move that’s likely to roil the nation’s bond market.

The government will sell 4.88 trillion rupees of bonds in rest of the financial year, up from its earlier target of 4.34 trillion rupees for October to March set just two weeks ago, the Reserve Bank of India said in a statement. The increase is due to additional borrowing needed to compensate states for meeting the shortfall in goods and services tax collection.

The pandemic