Centre to borrow Rs 7.5 lakh crore via dated securities in H1FY25

Reserve Bank of India

The Centre will borrow Rs 7.50 lakh crore via the issuance of government securities in the April-September period of FY25.

At Rs 7.50 lakh crore, the scheduled first-half borrowing of the central government amounts to 53.08 percent of the full-year estimate, the finance ministry said in a statement on March 27.

The Interim Budget for 2024-25 had pegged the Centre's full-year gross borrowing estimate at Rs 14.13 lakh crore from the markets.

The Reserve Bank of India (RBI) manages the borrowing programme on behalf of the government by issuing bonds via auctions every Friday.

"H1 government borrowing slightly lower as government wants to save on interest costs , optimise cash balance," said Finance Secretary T.V. Somanathan, CNBC TV18 tweeted on microblogging platform X.

The borrowing number is key since the central government finances its fiscal deficit mainly through issuing dated securities.

In April-September, the size of the weekly government bond auctions will range from Rs 22,000 crore to Rs 38,000 crore.

Finance Ministry in a release said that the government has decided to introduce a new dated security of 15-year tenor based on the market feedback and in line with global market practices.

Through the 15-year security, the centre will borrow Rs 1.04 lakh crore in the first half of the current financial year. The borrowing through this security is 13.87 percent of the total borrowing in H1FY25.

The government will also borrow Rs 12,000 croer through green bonds in first half of FY25.

Finance Ministry also said that the Government of India, in consultation with the RBI, will continue to have the flexibility to bring about modifications in the above calendar in terms of notified amount, issuance period, maturities, etc. and to issue different types of instruments, including instruments having non-standard maturity, floating rate bonds (FRBs), inflation indexed bonds (IIBs), depending upon the requirement of the Government of India, evolving market conditions and other relevant factors, after giving due notice to the market.

The RBI will be conducting switches of dated securities through auction on the third Monday of every month or at more frequent intervals. In case the third Monday is a holiday, switch auction will be conducted on the fourth Monday of the month, release added.

Apart from this, the centre will also borrow Rs 3.21 lakh crore through Treasury Bills (T-Bill) auction between April 01, 2024 and June 30, 2024 in Fy25.

The government will issue 91-day T-Bills worth Rs 1.44 lakh crore, 182-day T-Bill worth Rs 79,000 crore, and Rs 98,000 crore worth of 364-day T-Bill, finance ministry said in a release.

"The Government of India, in consultation with the Reserve Bank of India, will have the flexibility to modify the notified amount and timing for auction of Treasury Bills depending upon the requirements, evolving market conditions and other relevant factors, after giving due notice to the market," release said.

Further, RBI said  in consultation with the Government of India, that the limit for Ways and Means Advances (WMA) for the first half of the financial year 2024-25 (April to September 2024) will be Rs 1.50 lakh crore.

The Reserve Bank of India may trigger fresh floatation of market loans when the Government of India utilises 75 per cent of the WMA limit, release said.