Pandemic likely to force India to borrow more, deficit monetisation is last resort: sources

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Revenue shortfalls in India, the major economy hardest hit by the coronavirus pandemic, are likely to force the government to borrow more, but it will only consider monetising its deficit as a last resort, sources familiar with discussions told Reuters.

A woman wearing a face mask waits at a Delhi metro train platform, on the first day of the restart of their operations, amidst the spread of coronavirus disease , in New Delhi, September 7, 2020. REUTERS/Adnan Abidi

“There will definitely be higher borrowing in the current year but whether we will print money, that is not yet decided. We will have to have patience and see how things go,” a senior official said.“We have seen what some of the countries have done in this regard, but we think that such a move would be the last resort for us,” the official added.

RBI has pumped in over 11 trillion rupees of liquidity into the market, helping to keep 10-year bond yields below 6% even as the government decided to borrow 70% more than last year as a result of the pandemic.

 

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Same story around the world.

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