Centre Finalises H2 FY25 Borrowing At Rs 6.61 Lakh Cr

The Government of India has finalised its borrowing program for the second half (H2) of the fiscal year 2024-25 at Rs 6.61 lakh crore, according to an announcement made on Thursday. This aligns with the projected target for the latter half of FY25, following a borrowing of over Rs 7 lakh crore in the first half of the year, with nearly 40 per cent of the loans secured through long-term bonds.

As part of the borrowing plan, the government will conduct 21 auctions, starting on September 30. The first auction will offer Rs 39,000 crore in bonds, including Rs 22,000 crore in 10-year bonds and Rs 10,000 crore in 50-year securities.

The borrowing will be distributed across securities with maturities of 3, 5, 7, 10, 15, 30, 40, and 50 years. The share of borrowing under different maturities will include 24.8 per cent for 10-year bonds, 15.9 per cent for 40-year bonds, and 10.6 per cent for both 5-year and 50-year securities. Additionally, the government may carry out switching or buyback of securities to smoothen its debt redemption profile and may use a greenshoe option to retain an extra Rs 2,000 crore against each security offered.

Treasury Bills and RBI’s Support
In the third quarter of FY25, the government plans to raise Rs 19,000 crore weekly through Treasury Bill (T-Bill) issuances. These will include Rs 7,000 crore under 91-day T-Bills, Rs 6,000 crore under 182-day T-Bills, and Rs 6,000 crore under 364-day T-Bills. The Reserve Bank of India (RBI) has set the Ways and Means Advances (WMA) limit at Rs 50,000 crore for H2 FY25 to address temporary mismatches in government accounts.

Economic Impact and Outlook
Analysts have noted that the gross borrowing figure of Rs 6.61 lakh crore is consistent with market expectations and represents only a marginal increase compared to last year. However, a 32 per cent year-on-year increase in net borrowings to Rs 6 lakh crore is expected due to a decline in redemptions. Nayar further added that, with a positive revenue outlook and potential underspending on capital expenditure, the fiscal deficit for FY25 could remain within the target of Rs 16.1 lakh crore or 4.9 per cent of GDP.

This borrowing program is a key component of the government’s fiscal strategy as it seeks to balance public expenditure, revenue growth, and market borrowings in the current fiscal year.