India plans to borrow ₹6.61 lakh crore from the market in the second half, representing 47.2% of its annual borrowing target.
The Indian government, in collaboration with the Reserve Bank of India, announced plans to borrow ₹6.61 lakh crore in the second half of FY 2024-25, which is 47.2% of its total borrowing target of ₹14.01 lakh crore.
On Thursday, September 26, the Indian government, in consultation with the Reserve Bank of India (RBI), announced plans to borrow ₹6.61 lakh crore in the second half (H2) of FY 2024-25. This amount represents 47.2% of the total gross market borrowing target of ₹14.01 lakh crore for the fiscal year, aligning with expectations.
The Ministry of Finance stated, "Out of the ₹14.01 lakh crore budgeted for FY 2024-25, ₹6.61 lakh crore (47.2%) is set to be raised in H2 through the issuance of dated securities, which includes ₹20,000 crore in Sovereign Green Bonds (SGrBs)."
The borrowing will occur through dated securities, including ₹20,000 crore in SGrBs, distributed over 21 weekly auctions. These securities will have maturities ranging from 3 to 50 years, with the largest proportion allocated to 10-year securities (24.8%). Additionally, the government plans to issue treasury bills worth ₹19,000 crore in the third quarter to manage short-term funding needs. The RBI has also established a ways and means advances (WMA) limit of ₹50,000 crore for the second half to address temporary discrepancies in government accounts.
Ajay Seth, Secretary of the Department of Economic Affairs, explained that two key factors influence the scheduled H2 borrowing. He noted that adjustments will be made to smooth repayments from borrowings during the pandemic years, ensuring the government adheres to its prudential limits for annual debt repayment—an approach also taken in the H2 calendar. Furthermore, T-bill borrowings have been moderated based on current holdings and estimated cash flows. The government remains committed to its target of raising ₹6.61 lakh crore in the second half to cover the revenue gap.
Finance Minister Nirmala Sitharaman had initially proposed borrowing ₹14.13 lakh crore through dated securities in her interim budget to address revenue shortfalls for the upcoming financial year. However, she later revised the gross borrowing estimate down by ₹12,000 crore in the July 2024 Union Budget due to strong revenue collections.
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