Centre’s borrowing for the second half of FY25 at Rs 6.61 lakh crore was in line with the Budgeted target for the second half of the financial year, according to the October-March borrowing plan released by the government on September 26.
It is estimated to have borrowed over Rs 7 lakh crore in the year's first half, of which nearly 40 percent was via longer tenure bonds.
The second half is expected to have 21 auctions, with the first starting from September 30, where the government would be auctioning Rs 39,000 crore worth of paper, of which Rs 22,000 crore is for 10-year bonds, while Rs 10,000 crore is for 50-year securities.
Securities with over 10 year tenure have had 76.6 percent share in total borrowing in the second half, as per MC analysis of the calendar.
Of this Rs 6.61 lakh crore, Rs 20,000 crore is expected to be for sovereign green bonds.
"The Government of India (GoI) maintained its gross borrowing figure for H2 FY2025 at Rs. 6.61 trillion, in line with ICRA’s expectations. While this is only marginally higher than year-ago levels, a sharp decline in redemptions would entail a sharp 32% YoY expansion in the net borrowings to Rs. 6.0 trillion in the second half of the fiscal," said Aditi Nayar, chief economist, Icra.
The government had budgeted Rs 14.01 lakh crore of gross borrowing for FY25 in the Budget presented on July 23, lower than Rs 14.13 lakh crore in the interim Budget.
This was also a 9 percent reduction from Rs 15.43 lakh crore the government had borrowed in FY24.
The reduction in borrowing is likely to help contain the fiscal deficit, where the government has set an aggressive target of 4.9 percent compared with 5.1 percent in the interim Budget.
Reserve Bank of India’s higher than expected dividend of Rs 2.1 lakh crore also helped contain fiscal deficit.
"Aided by the favourable outlook for revenues and a possible undershooting of the ambitious capex target, ICRA expects the GoI’s fiscal deficit to print in line with or mildly trail the FY2025 RBE of Rs. 16.1 trillion or 4.9 percent of GDP, at the current juncture. Therefore, the market borrowings appear unlikely to exceed the announced level for H2 FY2025," Nayar further added.
The government plans to bring down the deficit to 4.5 percent by FY26.
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