Govt cancels last bond auction of the year... as expected

The Reserve Bank of India (RBI) announced on Monday that the government is cancelling the financial year’s last bond auction given its cash position. For once we can say we told you so. On March 1, this column had argued that the fiscal data for April-to-January, released on Feb 28, had shown that the government will most likely overshoot its tax revenue targets by about Rs 1.5-1.8 lakh crore, while it could fall short of spending the revised budgeted amount of Rs 34.5 lakh crore.

In fact, we had argued the government could have cancelled the entire extra Rs 80,000 crore it said it would borrow from the market this year. But as they say in Hindi “der aaye durust aaye”.

The direct tax numbers that the government revealed as of March 16, after advance tax collections further confirmed our’ and the markets’ calculations. The direct tax collections were a good Rs 20,000 crore higher than the revised estimates for the full FY21.