Moneycontrol :Wed, Feb 20, 2013 at 10:15
Borkerage house Goldman Sachs estimates that the government could borrow Rs 4.9 lakh crore in 2013-14 to finance the fiscal deficit. It also expects the Reserve Bank of India to do open market operations (OMOs) of about Rs 1 lakh crore to meet government demand and keep bond yields steady.
Borkerage house Goldman Sachs estimates that the government could borrow Rs 4.9 lakh crore in 2013-14 to finance the fiscal deficit. It also expects the Reserve Bank of India to do open market operations (OMOs) of about Rs 1 lakh crore to meet government demand and keep bond yields steady.
"In FY14, we expect the government to have a net borrowing requirement of Rs 4.9 trillion (Rs 4.9 lakh crore).We expect banks to continue to provide a major chunk of the demand, due to our expectation of private sector credit demand remaining muted in the first half of FY14, before gradually picking up," the Goldman Sachs note to clients said.
"We assume that an additional USD 5 billion will be auctioned to FIIs. In our view, domestic retail will likely continue to invest in government bonds due to expectations of lower interest rates. Yet, the RBI may need to do about Rs1 trillion ( Rs 1 lakh crore) in OMOs to meet government demand and anchor bond yields. Given inflation gradually coming off, we think there will be less reluctance for the RBI to do so," the note said.
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