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Funding Risks Emerge for India Inc. as Modi Boosts Borrowing

  • Extra borrowing to crowd out corporate borrowers: Manglunia
  • Spread on top-rated three-year company debt highest since 2013
Updated on

A new threat is growing for India’s local credit market, already reeling under the strains of the Covid-19 pandemic, world’s biggest lockdown and a prolonged shadow bank crisis.

Corporate borrowers now also risk getting crowded out as the government steps up debt issuance. The latest move came late Friday, when Prime Minister Narendra Modi’s government said it will borrow 12 trillion rupees ($159 billion) in the fiscal year that began April 1, 54% more than budgeted.