Mumbai: India’s corporate bond market can develop if the government reduces its borrowing programme, a senior Reserve Bank of India (RBI) official said on Friday.

“If government reduces borrowing programme, fiscal consolidation happens, then there is demand for corporate bonds,” said Deepak Mohanty, executive director, responsible for the monetary policy department at the RBI.

Reforms in the pension and insurance sector will also help in higher demand for corporate bonds, which will in turn help in financing infrastructure needs, he added.

India’s eleventh five year plan from 2007-08 to 2011-12 has allocated $500 billion for infrastructure investment, and for the twelfth plan it is $1 trillion.

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