India’s bonds dropped for a second day before central bank and finance ministry officials reveal how much more debt the country will issue to fund economic stimulus packages. The yield on 2018 notes has climbed more than a percentage point so far in 2009 as the government borrowed more than budgeted for the fiscal year ending on March 31. Stimulus spending will be about 1.5 trillion rupees ($30.8 billion), Economic Affairs Secretary Ashok Chawla said yesterday. “I am expecting yields to harden further because the extra supply will have to be taken into consideration,” said Srinivasa Raghavan, head of treasury at IDBI Gilts Ltd., a primary dealer that underwrites government debt sales in Mumbai. The yield on the 8.24 percent note due April 2018 rose six basis points to 6.39 percent as of 9:52 a.m. in Mumbai, according to the central bank’s trading system. The price fell 0.45, or 45 paise per 100-rupee face amount, to 112.70. The rate may rise to 6.45 percent this week, Raghavan said. Prime Minister Manmohan Singh announced two stimulus packages in the past two months to revive growth in Asia’s third- largest economy. The federal government has raised more than 2 trillion rupees this fiscal year, compared with the originally budgeted 1.45 trillion rupees.

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