GROSS MARKET BORROWING MAY HIT ₹17 TRILLION IN FY27

BOND markets have seen some volatility in the recent period, with the yields on the 10-year G-sec creeping up by nearly 13 bps in the last two months, from an average of 6.52% in November 2025 to 6.65% in January 2026.

- ADITI NAYAR

Nirmala Sitharaman

This uptick is despite continued monetary easing and liquidity support in the form of CRR cuts, swaps and open market operations (OMO), and is likely to have been driven by fiscal concerns, including those around the absorption of the supply in FY27, which will be announced in the upcoming Budgets of the Government of India and the states.

Firstly, in the FY26 Budget math, while a large miss on the tax collections front is imminent, this would be partly offset by higher-than-budgeted non-tax collections. Besides, the Government of India’s (GoI) non-interest non-subsidy revex needs to grow by an elevated 30% in the last four months of the fiscal to meet the FY26 Budget Estimate (BE), which is unlikely to materialise, leaving room for expenditure savings. Consequently,we do not expect a material fiscal slippage in FY26, suggesting that the GoI will stick to its market borrowing plan in the remainder of the fiscal.