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2G spectrum auction, IIP flop show may hit borrowing costs, GDP target

By Religare
|

The 2G telecom spectrum auction which netted the government just Rs 9,407 crore, as against the target of around Rs 40,000 crore, and the steep fall in industrial output may again force the economists to revise the GDP estimates of India, as even the bond traders fear a jump in the government borrowing.

Rise in government's borrowing, which is very likely considering the 2G auction outcome and muted disinvestment results so far, will be a big blow to finance minister's aim to bring fiscal deficit down to 5.3 per cent in the current fiscal.

 

Goldman Sachs, JPMorgan, Nomura Securities and ING Vysya Bank have already raised concerns over FM's fiscal deficit target, pushing the bond yields higher. 10-year bonds saw their yields shooting up by 3-5 basis points since RBI's October policy which highlighted central bank's concerns over fiscal deficit.

Experts have been estimating the government to borrow an additional Rs 50,000 crore this fiscal, from the budgeted Rs 5.7 lakh crore.

Story first published: Monday, November 19, 2012, 11:30 [IST]
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