India plans to borrow USD 21 bln in 2007-08

Mumbai,Mar 31: India plans to issue Rs 92,000 crore of bonds in the first half of 2007/08 starting April, compared with Rs 89,000 crore in the year-ago period, a leading banker said.

Bond yields is expected to rise sharply next week with the central bank also unexpectedly tightening policy.

The yield on the 10-year federal bond ended at 8 per cent, up from 7.96 per cent at the previous close.

On Friday, after the market hours, the central bank declared to raise Repo rate, its key short-term lending rate, by 25 basis points to 7.75 per cent with immediate effect to fight inflation, which has adamantly remained high at nearly 6.5 per cent annually.

It also increased cash reserve ratio (CRR), the deposit banks must hold with the central bank, by 50 basis points to 6.5 per cent in two tranches, which will drain Rs 15,500 crore (USD 3.6 billion).

The government will auction Rs 16,000 crore of bonds in April and Rs 18,000 crore in May, a spokesperson added.

UNI