By Aftab Ahmed

NEW DELHI, (Reuters) – The Indian government could reduce its record-breaking market borrowing of 14.95 Trillion rupees ($200 Billion) by up to 600 billion rupees for next year’s fiscal year. Two government sources confirmed this.

Sources claimed that Tuesday’s budget estimate did not include the most recent bond swap between the central bank and the government at the beginning of January.

Sources said that the reduction might be made before March 31st, despite them requesting anonymity due to the sensitive nature of the subject.

India’s 10 year bond yield continued rising on Wednesday. It reached a 2-and-half-year high due to its latest borrowing plan. The borrowing was 40% more than what had been proposed for this year.

For 2022/23, the markets were expecting a borrowing amount of between 12-13 trillion Rupees.

India has switched almost 1.2 trillion rupees in government bonds Jan. 28, with debts totalling 636.5 billion Rupees due to mature during the following fiscal year.

The switch was not factored. One official stated that it would reduce the amount of borrowing in the current year.

According to a second official, the switching could result in a reduction of borrowing for 2022/23 up to 500 billion-600 billion Rupees.

Officials also stated that RBI will intervene on the market in order to smoothen borrowing in 2022/23.

The concern among bond traders over India’s fiscal year 2019 budget, which is geared towards growth, has fueled fears that the central banking may be forced to increase interest rates to combat inflation. This is despite the bank’s dovish policy position.

For further information, traders will be looking ahead to the February 9-9 monetary policy review.

($1 = 74.8759 Indian Rupees