India bonds poised to rally as government skips further borrowing plans

A farmer carries rice saplings in a bamboo basket at a paddy field on the outskirts of Guwahati, India. (AP)
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Updated 03 February 2020
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India bonds poised to rally as government skips further borrowing plans

  • Finance Minister Nirmala Sitharaman outlined a multibillion dollar package for farm and infrastructure spending in the budget for 2020/21

NEW DELHI: Indian bonds look set to rally when markets open on Monday after the new budget projected fiscal deficits in line with expectations, without any further market borrowing during the current fiscal year.

Finance Minister Nirmala Sitharaman outlined a multibillion dollar package for farm and infrastructure spending in the budget for 2020/21, but the stimulus fell short of market expectations and stocks slumped during a special trading session on Saturday.

Bond market players, however, said the revised fiscal deficit target of 3.8 percent for the current fiscal year and 3.5% for the next were largely in line with expectations.

“The market expected extra borrowing for this year, that hasn’t come. Also foreign portfolio limits have been opened up in some bonds and that could lead to those bonds being included in international bond indexes,” said A. Prasanna, head of fixed income at ICICI Securities Primary Dealership.

With the government expected to miss its fiscal deficit target, investors had assumed it would borrow additional funds from the market over the next two months to fund the deficit, but the government has made adjustments to avoid this.

Traders predicted a 5-10 basis point rally in bond yields, but said there would be strong resistance for the benchmark 10-year bond around 6.5 percent levels. 

Traders said although yields will fall in the near term, gross borrowing of 7.8 trillion rupees for the next fiscal year will be challenging for investors, as this could push yields higher over the medium term. 

“There is huge surplus liquidity in the market, so RBI (Reserve Bank of India) is unlikely to announce any open market operations and in the absence of any RBI support, the pressure on the market will be huge,” a senior debt trader at a private bank said.

The government has said it will borrow a net 5.36 trillion rupees from the market in 2020/21, buy back 300 billion rupees worth of bonds and switch 2.7 trillion rupees worth of debt.

India’s nominal growth projection and fiscal deficit target for 2020/21 will be challenging to achieve, a Moody’s analyst warned on Saturday.

Traders also said India’s divestment target was fairly high and they would monitor it closely to see if the government can raise that money. If the government falls short, there was a risk of market borrowing rising further.

The government aims to raise 2.1 trillion rupees by stake sales next year.

Government officials said they were taking steps to allow better access to Indian bonds, allowing unlimited investments in some bond categories.

One official said the government hopes to be included in two global bond indices in 2020/21.


Over 3k flights cancelled across the Middle East after attack on Iran by the US, Israel

Updated 01 March 2026
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Over 3k flights cancelled across the Middle East after attack on Iran by the US, Israel

RIYADH: US and Israeli strikes on Iran led to widespread airspace shutdowns in the Middle East, canceling and rerouting thousands of flights and paralyzing key international travel corridors.

Flight cancellations affected seven airports across the Middle East, including Dubai and Abu Dhabi in the UAE, Doha in Qatar, and Manama in Bahrain.

Emirates Airlines said in a statement: “Due to multiple regional airspace closures, Emirates has temporarily suspended all operations to and from Dubai, up until 1500 hrs UAE time on Monday, 2 March.”

A flydubai spokesperson said the situation is evolving, and the airline is closely monitoring developments while coordinating with authorities to adjust its flight schedule.

“Our teams are working diligently to implement comprehensive welfare for all affected customers. The safety of our passengers and crew remains our highest priority,” the spokesperson said.

He added: “We are currently experiencing a high volume of calls and appreciate our customers’ patience while our teams work to assist everyone as quickly as possible.”

Qatar Airways announced that the airport will remain closed until at least the morning of March 2.

“Qatar Airways flights to, and from, Doha have been temporarily suspended due to the closure of Qatari airspace,” the airline said.

It added: “Qatar Airways will resume operations once the Qatar Civil Aviation Authority announces the safe reopening of Qatari airspace.”

Saudia also said in an official statement that it had canceled a number of flights due to developments in the region and the closure of airspace.

The organization said the decision was taken in line with aviation safety and security standards, noting that its Emergency Coordination Center is closely monitoring developments with relevant authorities.

Saudia urged passengers to verify the status of their flights before heading to the airport and said guests would be notified of updates through the contact details associated with their bookings.

The carrier added that further information would be announced in a subsequent statement if available.

Air Arabia also said its flights were experiencing cancellations, delays, or rerouting as a result of the evolving situation and airspace closures.

Airlines cited airspace closures and safety concerns as the main reasons for flight disruptions, urging passengers to check official channels for updates as the situation develops.

Israeli airspace also remained closed on March 1st. Israeli airline El Al said it was preparing a recovery effort to bring home Israelis stranded abroad once the airspace reopened.

Travelers were either stranded or diverted to other airports on Feb. 28 after Israel, Qatar, Syria, and Iran as well as Iraq, Kuwait and Bahrain, closed their airspace.

After the UAE announced a temporary partial airspace closure, FlightRadar24 recorded no flights over the country.

The closures affected key hub airports in Dubai, Abu Dhabi, and Doha. Emirates, Qatar Airways, and Etihad, airlines that operate from these hubs, normally handle around 90,000 passengers daily, with even more traveling to other Middle Eastern destinations, according to aviation analytics firm Cirium.

Airports hit by attacks

Two airports in the UAE reported incidents as the government there condemned what it called a “blatant attack involving Iranian ballistic missiles” on Feb.28.

Dubai International Airport, the UAE’s largest and one of the world’s busiest, reported four injuries, while Abu Dhabi’s Zayed International Airport said a drone attack killed one person and injured seven others. Strikes were also reported at Kuwait International Airport.

Though Iran did not publicly claim responsibility, the scope of retaliatory strikes that Gulf nations attributed to Iran extended beyond the US bases that it previously said it would target.

Flight delays, cancellations are likely to continue

“For travelers, there’s no way to sugarcoat this,” said Henry Harteveldt, an airline industry analyst and president of Atmosphere Research Group.

“You should prepare for delays or cancellations for the next few days as these attacks evolve and hopefully end,” he added.

To avoid conflict zones, airlines are rerouting Middle East flights over Saudi Arabia, adding hours and fuel costs, which could push ticket prices higher if the tensions persist.

The extra flights will strain air traffic controllers in the Kingdom, who may need to slow traffic for safety. Meanwhile, countries that closed their airspace will lose out on overflight fees from passing airlines.

Mike McCormick, former head of air traffic control at the FAA and now a professor at Embry-Riddle Aeronautical University, said some countries may reopen parts of their airspace in the coming days once US and Israeli officials provide airlines with details on military flight zones and Iran’s missile capabilities.

“Those countries then will be able to go through and say, ok, we can reopen this portion of our space but we’ll keep this portion of our airspace closed,” McCormick said.

“So, I think what we’ll see in the next 24 to 36 hours is how the use of airspace evolves as the kinetic activity gets more well-defined and as the capability of Iran to actually shoot missiles and create additional risk is diminished due to the attacks,” he added.

But it is unclear how long the disruption to flight operations could last. For comparison, the Israeli and US attack on Iran in June 2025 lasted 12 days.