Centre retains borrowing target for FY25, plans Rs 6.61 lakh crore borrowing in H2
The government will carry out switching/buyback of securities to smoothen the redemption profile, it said.It will continue to reserve the right to exercise greenshoe option to retain an additional subscription of up to Rs 2,000 crore against each of the securities indicated in the auction notifications, it said.
The central government has decided to maintain its borrowing target for the current financial year, announcing plans to raise Rs 6.61 lakh crore through the auction of dated securities in the second half (H2) of FY 2024-25. This borrowing is aimed at bridging the revenue gap and driving economic growth.
The finance ministry, in a statement on Thursday, revealed, "Out of the gross market borrowing of Rs 14.01 lakh crore budgeted for 2024-25, Rs 6.61 lakh crore (47.2 percent) is planned to be borrowed in H2 through issuance of dated securities, including Rs 20,000 crore in Sovereign Green Bonds (SGrBs)."
The Rs 6.61 lakh crore borrowing will be conducted through 21 weekly auctions. The issuance will cover a range of maturities, from 3 to 50 years, with different shares of borrowing allocated across these periods. The break-up includes 5.3 percent for 3-year securities, 10.6 percent for 5-year securities, 7.6 percent for 7-year securities, 24.8 percent for 10-year securities, 13.2 percent for 15-year securities, 12.1 percent for 30-year securities, 15.9 percent for 40-year securities, and 10.6 percent for 50-year securities.
The government also announced plans for switching and buyback of securities to smoothen the redemption profile and confirmed the continuation of the greenshoe option, allowing it to retain an additional Rs 2,000 crore per auction if necessary.
In 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 government accounts, the Reserve Bank of India has set the Ways and Means Advances (WMA) limit for H2 FY 2024-25 at Rs 50,000 crore.
Out of the total market borrowing target of Rs 14.01 lakh crore, Rs 7.4 lakh crore, or 52.8 percent, has already been raised in the first half (H1) of the financial year. Initially, Finance Minister Nirmala Sitharaman had proposed a gross borrowing of Rs 14.13 lakh crore in the interim budget, but the estimate was later reduced by Rs 12,000 crore in the final budget due to robust revenue collection.
The borrowing target for FY25 is lower than the previous year’s gross borrowing estimate of Rs 15.43 lakh crore, the highest on record. The finance ministry noted that private investments, particularly in sectors like steel and cement, are showing positive signs due to the government's significant capital expenditure.
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