Wednesday announced the first component of the package that will provide $72 billion in liquidity to small businesses and power utilities.
Initial details on the spending don’t point to a significant boost to the government’s ramped-up borrowing plan, according to Bloomberg Economics’ Abhishek Gupta.
New expenditure amounts to Rs 1.6 trillion for fiscal 2021 from the Rs 13.4 trillion stimulus already announced, he said.
“Bond traders are hoping that any further borrowing will be contained,” said Debendra Dash, a trader at AU Small Finance Bank
“The market is also expecting RBI action in some form whether via open-market operations or Operation Twist.”
Yields on 2029 bonds jumped 19 basis points on Monday after authorities raised the borrowing by 54 per cent to Rs 12 trillion. Subsequent announcement of the stimulus by Prime Minister Narendra Modi
led to concerns that even enlarged bond sale won’t be enough to meet the revenue shortfall and fund the relief package.
The market will be able to absorb the more-than-50 per cent spike in government borrowings announced last week, Sanjeev Sanyal, principal economic adviser in the finance ministry, said in an interview to BloombergQuint.