<p>Mumbai/ New delhi: The Indian government aims to manage its cash position by tweaking Treasury bills sales, if needed, instead of resorting to changes to the bond auction schedule, two government officials said.</p>.<p>It is easier to remain flexible and manage T-bill borrowing, as tinkering with bond auctions disrupts the market and traders want the government to stick to the borrowing calendar, T V Somanathan, finance secretary, told Reuters on Wednesday.</p>.<p>In the federal budget on Tuesday, the government lowered borrowing through bonds by 120 billion rupees ($1.43 billion) for the fiscal year ending March 2025 while slashing Treasury bill issuances, which will result in a net inflow of 500 billion rupees into the banking system.</p>.India needs aggressive reduction in government debt, Moody's analyst says.<p>Another government official, who did not wish to be named as he is not authorised to speak to the media, said it is better to lower borrowings through T-bills, as it avoids market volatility.</p>.<p>The government assumes bond yields will remain approximately around prevailing levels, perhaps falling slightly, Somanathan said. "I am not able to foresee anything beyond 2-3 years."</p>.<p>Investors expect India's bond yield curve to steepen as the lower T-bill supply pushes short-term bond yields lower compared with long-term yields.</p>.<p>T-bills, which mature within a year, saw yields falling by 3-4 basis points after the budget, and traders expect a further decline. India's five-year bond yield was down marginally at 6.89 per cent, while benchmark bond yield was at 6.96 per cent.</p>.<p>"Since most of the reduction in fiscal deficit is from cut in supply of T-bills, I expect the yield curve to steepen and most of the action will shift to short-end, mainly the three-five year segment," said Vikas Goel, managing director at the primary dealer PNB Gilts.</p>.<p>Yields on bonds of up to five years are expected to ease by 10-12 basis points, and their spread with the benchmark bond yield will widen as "bull-steepening is the order of the day", Goel said. </p>.<p><em>($1 = 83.7070 Indian rupees)</em></p>
<p>Mumbai/ New delhi: The Indian government aims to manage its cash position by tweaking Treasury bills sales, if needed, instead of resorting to changes to the bond auction schedule, two government officials said.</p>.<p>It is easier to remain flexible and manage T-bill borrowing, as tinkering with bond auctions disrupts the market and traders want the government to stick to the borrowing calendar, T V Somanathan, finance secretary, told Reuters on Wednesday.</p>.<p>In the federal budget on Tuesday, the government lowered borrowing through bonds by 120 billion rupees ($1.43 billion) for the fiscal year ending March 2025 while slashing Treasury bill issuances, which will result in a net inflow of 500 billion rupees into the banking system.</p>.India needs aggressive reduction in government debt, Moody's analyst says.<p>Another government official, who did not wish to be named as he is not authorised to speak to the media, said it is better to lower borrowings through T-bills, as it avoids market volatility.</p>.<p>The government assumes bond yields will remain approximately around prevailing levels, perhaps falling slightly, Somanathan said. "I am not able to foresee anything beyond 2-3 years."</p>.<p>Investors expect India's bond yield curve to steepen as the lower T-bill supply pushes short-term bond yields lower compared with long-term yields.</p>.<p>T-bills, which mature within a year, saw yields falling by 3-4 basis points after the budget, and traders expect a further decline. India's five-year bond yield was down marginally at 6.89 per cent, while benchmark bond yield was at 6.96 per cent.</p>.<p>"Since most of the reduction in fiscal deficit is from cut in supply of T-bills, I expect the yield curve to steepen and most of the action will shift to short-end, mainly the three-five year segment," said Vikas Goel, managing director at the primary dealer PNB Gilts.</p>.<p>Yields on bonds of up to five years are expected to ease by 10-12 basis points, and their spread with the benchmark bond yield will widen as "bull-steepening is the order of the day", Goel said. </p>.<p><em>($1 = 83.7070 Indian rupees)</em></p>