Weaker BJP in power won't increase borrowing in July budget, says Kotak Mahindra Bank

India Business News: MUMBAI: The yield on the benchmark 10-year government bond crashed to 7% on Wednesday, the lowest in over a year.

India plans to lower its budget deficit by at least 50 basis points in 2024/25 from its target of 5.9% of GDP, while raising capital spending by up to 20%. This move is expected to depend on increased revenues and efforts to curb subsidies. The government is confident of meeting its 5.9% target for the current year ending on March 31.

Indian government bond yields climbed on Thursday, with the benchmark yield posting its biggest single-session rise in 2023, triggered by a relentless rise in oil prices as well as Treasury yields, while debt supply further hurt.

Interim Budget: Prime Minister Narendra Modi will likely use the last budget of the present government before the elections to woo voters with new spending measures, while avoiding a fiscal deficit increase. The economys rapid expansion has led to a tax windfall for the government, helping it meet its goals of curbing the deficit. Finance Minister Nirmala Sitharaman, who will deliver her sixth budget speech on Feb. 1, has scope to keep infrastructure spending going and take targeted steps to support Modis priority sectors for the elections: farmers, women, the poor, and young people.

As we are heading towards the general elections in the middle of this year, the Opposition has intensified its attack on the Modi government for a lack of adequate jobs for India's burgeoning youth. Each year, more than 1 million youths join India's workforce. Thus, it is imperative for the ruling dispensation to provide a clear-cut path; otherwise, India's demographic dividend could turn into a demographic disaster.

The 10-year benchmark 7.26% 2032 bond yield was at 7.1987% as of 10:35 a.m. IST, after closing at 7.2750% on Wednesday.

India Business News: MUMBAI: Government bond yields ended lower on Monday, with the benchmark bond yield ending at its lowest level in nearly one year, as traders and fore.

Indian government bond yields declined on Wednesday, in anticipation of a policy pivot from the U.S. Federal Reserve after an expected rate hike. Traders largely expect the central bank to maintain a prolonged pause amid an improvement in inflation outlook and a sharp fall in oil prices. The 10-year benchmark 7.26% 2033 bond yield fell to 7.0500%, its lowest level since April 26, 2022

The government aims to limit the increase in overall spending to around 10% in the interim budget for FY25, balancing the need for sustained growth with fiscal consolidation imperatives. It plans to achieve this by raising capital expenditure at a slower pace, while moderately increasing revenue spending. The government has set a fiscal deficit target of 4.5% of GDP by FY26 and expects to meet the target this year.

Interim Budget 2024 key announcements for common man: The government plans to boost infrastructure spending by 11% in the upcoming fiscal year while keeping the fiscal deficit in check. Finance Minister Nirmala Sitharaman outlined initiatives for the next five years, including increased housing and enhanced medical care for women. The government aims to reduce the fiscal deficit to 5.1% in the next financial year. Sitharaman allocated Rs 11.1 lakh crore to capital spending, a notable 11.1% increase. She also announced the launch of the Housing for Middle Class scheme and the promotion of Cervical Cancer Vaccination for girls aged 9-14 years.