The government is confident that it can obtain funds for its massive 2021-22 borrowing programme at below six per cent, as the central bank has given assurances that it will provide liquidity, two senior officials told Reuters.
Holding policy interest rates unchanged at record lows on Friday, Reserve Bank of India Governor Shaktikanta Das assured investors that its stance on liquidity remained accommodative and that the government’s ₹ 12.06 lakh crore borrowing programme for the fiscal year starting April would be managed in a smooth and orderly manner.
“RBI has assured us that the borrowing for 2021/22, yields will be comfortable and we expect it to not top 5.9 per cent for the fiscal,” one of the two sources said.
He added that the government’s long-term average borrowing cost is expected to be between 5.8-5.9 per cent in the fiscal year starting April.
Despite the pledge from the RBI, bond yields had surged on Friday as investors had been hoping for a more clarity in the form of a bond purchase calendar. Yields on most bonds however retreated later on Friday, following the debt auction results.
“The RBI has shown that it will not blink as was evident in the auction results,” a second source who asked not to be named as he was not cleared to discuss the matter publicly said.