Indian Government Bond Yields Hit One-Year High After Budget Borrowing Announcement

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Last Updated: 2nd February 2026 - 02:34 pm

Summary:

Indian government bond yields rose to their highest level in a year on February 2 after the Union Budget projected higher market borrowings for FY27. The 10-year benchmark yield climbed 8 basis points to 6.78%. Gross borrowing has been pegged at ₹17.2 lakh crore. Equity benchmarks traded in a narrow range during early trade.

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Indian government bond yields moved higher on Monday after the Union Budget outlined increased borrowing for the next financial year.

The 10-year benchmark government security rose 8 basis points to 6.778%, compared with the previous close of 6.696%. It later touched 6.78%, the highest level since January 2025.

Borrowing Estimates

The government has estimated gross market borrowing at ₹17.2 lakh crore for FY27, up 16% from the current year’s budgeted level. Net market borrowing has been pegged at ₹11.7 lakh crore to fund a fiscal deficit of 4.3% of GDP.

Higher borrowing typically increases the supply of government securities in the market.
The Reserve Bank of India has been conducting liquidity operations as part of its regular debt market management.

Equity Market Movement

Equity benchmarks showed limited movement. The National Stock Exchange of India Nifty 50 rose 0.04% to 24,833.65, while the Bombay Stock Exchange Sensex gained 0.17% to 80,863.21 in morning trade.

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