India Unveils Budget to Counter US Tariffs and Manage Record Borrowing Plan

India's government has unveiled a new budget aimed at protecting the economy from the impact of US tariffs, while also managing a record borrowing plan that is expected to put pressure on the bond market. According to Bloomberg, Indian Prime Minister Narendra Modi's government has released a spending plan that includes support for exporters and strategic sectors, in an effort to shield the economy from the effects of US tariffs. The move is seen as a response to the ongoing trade tensions between the US and India, which have resulted in the US imposing tariffs on certain Indian goods. The budget plan includes a number of measures aimed at supporting exporters, including a scheme to reimburse taxes and duties on exported goods. The government has also announced plans to provide support to strategic sectors, such as textiles and leather, which have been hit hard by the US tariffs. However, the budget plan also includes a record borrowing plan, which is expected to put pressure on the bond market. The government plans to sell 7.1 trillion rupees ($100 billion) of bonds in the fiscal year starting April 1, which is more than the 6.4 trillion rupees borrowed in the previous year. This has led to concerns among traders that the increased borrowing will lead to higher yields and lower bond prices. "Market participants are bracing for losses on Monday, as the government's plan to sell a record amount of debt adds to pressure from weakening demand," said a market participant, who wished to remain anonymous. The bond market has already been under pressure in recent weeks, due to a combination of factors including a rise in crude oil prices and a decline in foreign investor demand. The increased borrowing plan is expected to add to these pressures, leading to potential losses for bondholders. The government's borrowing plan is seen as a necessary step to finance its spending plans, which include a number of infrastructure projects and social welfare schemes. However, it also raises concerns about the country's fiscal deficit, which is expected to widen to 3.4% of GDP in the fiscal year starting April 1. Despite these concerns, the government is confident that the budget plan will help to support the economy and promote growth. "The budget is a step in the right direction, as it provides support to exporters and strategic sectors, while also promoting investment and growth," said a government official, who wished to remain anonymous. Overall, the budget plan is seen as a key step in India's efforts to manage the impact of US tariffs and promote economic growth. However, the increased borrowing plan is expected to put pressure on the bond market, leading to potential losses for bondholders. The impact of the plan on the economy and bond market will be closely watched in the coming weeks and months. Sources: * Bloomberg: New India Budget Takes Aim at Trade Threats * Bloomberg: Traders Brace for Bond Losses on India’s Record Borrowing Plan