The Centre has outlined its borrowing strategy for the first half of the upcoming financial year, revealing plans to borrow ₹7.5 trillion. This borrowing, earmarked for FY25, will primarily be facilitated through the issuance of dated government securities, complemented by ₹12,000 crore worth of sovereign green bonds.
In the interim budget for FY25, the government had initially projected its borrowing from the market to reach ₹14.13 trillion. However, with the latest announcement, it’s clear that a significant portion of this borrowing will occur in the first six months of the fiscal year. The decision to issue sovereign green bonds aligns with the government’s commitment to sustainable finance and environmentally responsible initiatives. These bonds, aimed at financing green projects, underscore the growing importance of environmental considerations in fiscal policy.
A finance ministry statement on Wednesday said the government has finalised its borrowing programme for the first half of FY25 in consultation with the Reserve Bank of India. “Out of gross market borrowing of ₹14.13 lakh crore (trillion) projected for FY 2024-25 in the union budget, ₹7.50 lakh crore (53.08%) is planned to be borrowed in the first half through dated securities, including ₹12,000 crore through issuance of sovereign green bonds,” the statement said. Based on market feedback and in line with global market practices, the government has introduced a new dated security with a 15-year tenor. Through the 15-year security, the Centre will borrow ₹1.04 trillion in the first half of the next financial year. The market borrowing would be completed through 26 weekly auctions. During H1FY25, the size of the weekly government bond auctions will range from ₹22,000 crore to ₹38,000 crore.
The government will continue to carry out switching of securities to smoothen the redemption profile and will have the right to exercise greenshoe option to retain an additional subscription of up to ₹2,000 crore against each of the securities indicated in the auction notifications. The weekly borrowing through issuance of treasury bills in the first quarter of FY25 is expected to be ₹27,000 crore for the first seven auctions and ₹22,000 crore for the subsequent six. The Centre will issue 91-day treasury bills worth ₹1.44 trillion, 182-day T-bills worth ₹79,000 crore, and 364-day T-bills worth ₹98,000 crore. “To take care of temporary mismatches in government accounts, the Reserve Bank of India has fixed the Ways and Mean Advances (WMA) limit for H1 of FY 2024-25 at ₹1.50 lakh crore,” the statement said.
