Government’s Borrowing Spree: Half Of Rs 14 Lakh Crore Target Set For First Half Of Fiscal Year

In a bid to meet its fiscal requirements for the upcoming financial year, the government of India has unveiled its borrowing plans, signalling its intention to secure Rs 7.5 lakh crore through the auction of bonds spanning maturities ranging from 3 years to 50 years during the first half of the fiscal year starting April 1. This substantial borrowing constitutes approximately 53% of the government’s total borrowing target of Rs 14.1 lakh crore for the fiscal year 2024-25.

Additionally, the government aims to raise Rs 49,000 crore through treasury bills with durations of 91 days, 182 days, and 364 days within the first quarter (April-June 2024) of the fiscal year. Out of the total projected gross market borrowing of Rs 14.13 lakh crore for the fiscal year 2024-25, approximately 53.1% is slated to be borrowed in the first half through dated securities, including Rs 12,000 crore through the issuance of sovereign green bonds (SGrBs).

A notable development highlighted in the release from the Ministry of Finance is the introduction of a new 15-year tenor-dated security, a decision influenced by market feedback and aligned with global market practices. The distribution of borrowing across various maturities, including the newly introduced 15-year tenor, reflects a diversified approach aimed at optimizing the government’s funding strategy. The breakdown of borrowing shares among different maturities includes 3-year (4.8%), 5-year (9.6%), 7-year (8.8%), 10-year (25.6%), 15-year (13.9%), 30-year (8.9%), 40-year (19.5%), and 50-year (8.9%) securities.

Earlier, during the budget, Finance Minister Nirmala Sitharaman had said that the government would reduce the quantum of gross borrowing for FY25, moreover, the government emphasizes its commitment to managing its debt profile effectively by continuing to conduct switching of securities to ensure a smooth redemption profile. This proactive approach underscores the government’s efforts to navigate fiscal challenges while adhering to long-term fiscal deficit targets set within the framework of the Fiscal Responsibility & Budget Management (FRBM) Act.

Finance Minister Nirmala Sitharaman had earlier indicated during the Budget announcement a reduction in the quantum of gross borrowing for the fiscal year 2024-25, aligning with the government’s broader fiscal objectives.