New Delhi: The Centre will borrow ₹6.55 trillion for the second half of the ongoing financial year which will be 42.45% of its gross market borrowing of ₹15.43 trillion for the full FY24. The borrowing will be done through dated securities, including ₹20,000 crore through the issuance of Sovereign Green Bonds, the finance ministry said in a statement on Tuesday.
While the government will stick to its borrowing plan for the year, it will issue 50-year security for the first time, in response to market demand for longer-duration securities, the ministry added.
The borrowing programme is finalised in consultation with the RBI, the ministry said. The Centre has budgeted a gross market borrowing of ₹15.43 trillion in FY 2024. The borrowing in the second half of the year will be completed through 20 weekly auctions, spread over 3, 5, 7, 10, 14, 30, 40 and 50 years’ securities, with different shares.
Finance minister Nirmala Sitharaman in her budget speech for FY24 had projected a fiscal deficit of ₹17.86 trillion accounting for 5.9% of the nominal gross domestic product (GDP). Centre is pursuing a target of a fiscal deficit lower than 4.5% of GDP by FY26.
The share of borrowing (including sovereign green bonds) under different maturities will be: 3 years (6.11%), 5 years (11.45%), 7 years (9.16%), 10 years (22.90%), 14 years (15.27%), 30 years (12.21%), 40 years (18.32%) and 50 years (4.58%).
Switching of securities will be carried out to smoothen the redemption profile. Out of the ₹1 trillion of budgeted switch amount, ₹51,597 crore of switch auctions have already been conducted and the balance amount of switch auctions will be conducted in the second half.
The government will continue to exercise the greenshoe option to retain an additional subscription of up to ₹2,000 crore against each of the securities indicated in the auction notification, the ministry added.
Weekly borrowing through issuance of Treasury Bills in the third quarter of FY 2023-24 is expected to be ₹24,000 crore with net borrowing of ₹(-)52,000 crore during the quarter. There will be issuance of ₹7,000 crore under 91 DTBs, ₹8,000 crore under 182 DTBs and ₹9,000 crore under 364 DTBs in each auction to be conducted during the quarter.
To take care of temporary mismatches in government accounts, the Reserve Bank of India has fixed the Ways and Mean Advances (WMA) limit for H2 of FY 2023-24 at ₹50,000 crore.
The ministry also said that as in the past, all the auctions covered by the calendar will have the facility of a non-competitive bidding scheme under which 5% of the notified amount will be reserved for the specified retail investors.
Also, the Centre or the RBI will continue to have the flexibility to bring about modifications in the borrowing calendar in terms of the notified amount, issuance period or maturity and to issue different types of instruments, including instruments having non-standard maturity, floating rate bonds (FRBs), consumer price index-linked inflation-indexed bonds (IIBs) etc., depending upon the requirement of the government, evolving market conditions and other relevant factors, after giving due notice to the market.
The ministry also said the borrowing calendar is subject to changes if circumstances warrant.
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Updated: 26 Sep 2023, 09:25 PM IST
