Relief for bond mkt on debt supply as govt prunes H2 borrowing plan

The Rs 10,000 cr cut in govt's mkt borrowing obviates the fear of oversupply of paper that typically builds up around Dec end when govt takes stock of its finances for the year

From the perspective of improving demand-supply dynamics in the government bond market, the Rs 10,000 crore reduction in the Centre’s borrowing for the current financial year barely scratches the surface.

What the Centre’s move does do, however, is send out a rare signal of assurance about its fiscal position, despite the government having taken on a significantly larger subsidy load and reduced taxes on certain fuels this fiscal.

The message to the sovereign bond market is that it can rest easy and for once safely do away with the niggling fear of additional market borrowing – and extra supply –