Government announces to borrow Rs 7.5 lakh crore from the market in the first half of FY25

The Indian government has outlined its borrowing strategy for the first half of the fiscal year 2024-25, aiming to raise Rs 7.5 lakh crore from the market through the issuance of various bonds, including sovereign green bonds.

Borrowing Strategy Overview

• The government intends to borrow Rs 7.5 lakh crore from the market through auctions of bonds with maturities ranging from 3 years to 50 years.
• This amount represents approximately 53% of the total borrowing target for FY25, which is set at Rs 14.13 lakh crore.
• The fundraise will include issuance of sovereign green bonds worth Rs 12,000 crore.

Introduction of New Dated Security

• In line with global market practices and based on market feedback, a new dated security with a tenor of 15 years will be introduced.

Details of Market Borrowing

• The borrowing of Rs 7.5 lakh crore will be completed through 26 weekly auctions.
• Various maturities will be offered, including 3-year, 5-year, 7-year, 10-year, 15-year, 30-year, 40-year, and 50-year securities.

Allocation of Borrowing by Maturity

• The distribution of borrowing across different maturities, including sovereign green bonds, will be as follows:
• 3-year: 4.8%
• 5-year: 9.60%
• 7-year: 8.8%
• 10-year: 25.6%
• 15-year: 13.87%
• 30-year: 8.93%
• 40-year: 19.47%
• 50-year: 8.93%

Fiscal Deficit and Borrowing Estimate

• The government aims to borrow Rs 14.13 lakh crore in FY25, which is lower than the previous fiscal year’s borrowing estimate of Rs 15.43 lakh crore.
• The fiscal deficit for FY25 is estimated at 5.1% of GDP, down from 5.8% in the current fiscal year.

Weekly Issuance of Treasury Bills

• Weekly borrowing through Treasury Bills for the first quarter of FY25 is expected to be Rs 27,000 crore for the initial seven auctions and Rs 22,000 crore for the subsequent six auctions.
• Weekly issuance includes Rs 12,000 crore under 91-day T-Bills, Rs 7,000 crore under 182-day T-Bills, and Rs 8,000 crore under 364-day T-Bills for the first seven auctions.
• Subsequent six auctions will see issuance of Rs 10,000 crore under 91-day T-Bills, Rs 5,000 crore under 182-day T-Bills, and Rs 7,000 crore under 364-day T-Bills.

Ways and Means Advances Limit

• The Reserve Bank of India (RBI) has set the Ways and Means Advances limit for the first six months of FY25 at Rs 1.5 lakh crore to address temporary mismatches in government accounts.