Govt may slash borrowing from market in April amid lockdown: Report

India may cut or even cancel planned borrowing on the market for April, examining options amid national foreclosure caused by coronavirus epidemic, two finance ministry sources told Reuters .

Travel restrictions disrupted trade and current volumes in the bond market and prompted prime brokers, the underwriters to issue bonds, to seek intervention from the Department of Finance.

“We are looking at different options. Borrowing in the market is difficult in today’s environment,” said a senior finance ministry official.

“So we are considering options to sell these bonds to LIC (Life Insurance Corp of India) or RBI (Reserve Bank of India). We could still consider a small loan on the market, but all options are on the table” , he said. said the government could also use the central bank’s ways and means mechanism – an overdraft mechanism that the RBI offers to the state – to meet any immediate cash flow needs.

Private bond placement would ensure that the government gets the money it needs for spending without impacting the market.

He also said the government would likely take a monthly view of borrowing in contrast to its normal six-month borrowing schedule.


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