The Central Government has maintained its borrowing target for the current financial year and is set to raise Rs 6.61 lakh crore through the auction of dated securities during the October-March period of 2024-25. This move is part of efforts to bridge the revenue gap and support economic growth.
According to a statement by the Finance Ministry on Thursday, out of the total gross market borrowing of Rs 14.01 lakh crore budgeted for 2024-25, Rs 6.61 lakh crore (47.2%) will be raised in the second half of the fiscal year through the issuance of dated securities. This includes Rs 20,000 crore of Sovereign Green Bonds (SGrBs).
The borrowing will be conducted through 21 weekly auctions, with securities issued across varying maturities of 3, 5, 7, 10, 15, 30, 40, and 50 years. The distribution of borrowing across these 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%).
To ensure smoother debt repayment, the government will also undertake switching or buyback of securities. Additionally, it retains the option to exercise a greenshoe mechanism, allowing it to retain an additional subscription of up to Rs 2,000 crore for each security offered in the auction.
For the third quarter of 2024-25, the government plans to borrow Rs 19,000 crore weekly through the issuance of Treasury Bills. This includes Rs 7,000 crore in 91-day Treasury Bills, Rs 6,000 crore in 182-day bills, and Rs 6,000 crore in 364-day bills.
To manage temporary mismatches in its accounts, the Reserve Bank of India has set the Ways and Means Advances (WMA) limit for the second half of FY 2024-25 at Rs 50,000 crore.
Of the gross market borrowing of Rs 14.01 lakh crore planned for the entire fiscal year, Rs 7.4 lakh crore, or 52.8%, was already raised during the first half (H1).
In the interim Budget, Finance Minister Nirmala Sitharaman had proposed borrowing Rs 14.13 lakh crore to address the revenue shortfall in the upcoming financial year. However, in the final Budget presented in July, the borrowing estimate was reduced by Rs 12,000 crore due to strong revenue collections.
The gross borrowing target for FY25 is lower than the previous year’s estimate of Rs 15.43 lakh crore, which was the highest ever.
The Finance Minister also pointed to signs of private sector investment growth in sectors like steel and cement, driven by the government’s substantial capital expenditure. The government has allocated Rs 11.11 lakh crore for capital expenditure in FY25, up from Rs 10 lakh crore in the previous year.
