Govt to borrow ₹6.61 lakh crore from October to March via dated securities

The Centre will borrow ₹6.61 lakh crore through 21 weekly auctions from October to March to fund the revenue gap and support economic growth. The government, in consultation with the RBI, announced its borrowing plan for the second half of FY 2024-25 on Thursday evening.

This represents 47% of the ₹14.01 lakh crore gross market borrowing target, aligning with market expectations.

“Out of Gross Market borrowing of ₹14.01 lakh crore budgeted for FY 2024-25, ₹6.61 lakh crore (47.2%) is planned to be borrowed in H2 through issuance of dated securities, including ₹20,000 crore of Sovereign Green Bonds (SGrBs),” the press release issued on September 26 read.

A detailed auction calendar has been issued to provide transparency and enable institutional and retail investors to plan their investments efficiently.

The government will switch or buy back securities to smoothen the redemption profile.

The government will retain the option to accept an additional ₹2,000 crore per auction and plans to issue ₹20,000 crore in sovereign green bonds. The borrowing plan aligns with market expectations, with only minor adjustments in tenure distribution.

The finance ministry announced that market borrowing will be spread across eight maturities, including 3-, 5-, 7-, 10-, 15-, 30-, 40-, and 50-year securities. The 40-year securities will have the largest share, followed by the 15-, 30-, and 50-year tenures, while the 3-year securities will have the smallest share.

The share of borrowing (including SGrBs) under different maturities will be 3-year (5.3%), 5-year (10.6%), 7-year (7.6%), 10-year (24.8%), 15-year (13.2%), 30-year (12.1%), 40-year (15.9%) and 50-year (10.6%).

The government plans to borrow a total of ₹2.47 lakh crore through Treasury Bills in the third quarter of FY 2024-25. Weekly borrowing will be ₹19,000 crore for 13 weeks, with ₹7,000 crore under 91-day bills, ₹6,000 crore under 182-day bills, and ₹6,000 crore under 364-day bills.

To address temporary mismatches in government accounts, the Reserve Bank of India has set the Ways and Means Advances (WMA) limit at ₹50,000 crore for the second half of FY 2024-25. Fresh market loans may be triggered when 75% of the WMA limit is utilised, RBI informed in a press release.

The government however will retain the flexibility to modify this borrowing calendar, including amounts, maturities, and issuance of non-standard instruments like FRBs and IIBs, based on market conditions and government needs.

All auctions the calendar covers will include a non-competitive bidding facility, reserving 5% of the notified amount for specified retail investors.

Of the total borrowing for FY 2024-25, ₹7.4 lakh crore (52.8%) was raised in the first half of this fiscal. In the Interim Budget, Finance Minister Nirmala Sitharaman set a gross borrowing target of ₹14.13 lakh crore, later reduced by ₹12,000 crore in July due to strong revenue collection. This year's gross borrowing of ₹14.01 lakh crore is lower than the previous year's estimate of ₹15.43 lakh crore, the highest ever. The fiscal deficit target for FY 2024-25 is set at 4.9% of GDP.