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regular-article-logo Tuesday, 25 June 2024

Central government seeks to mobilise Rs 7.5 lakh crore (trillion) through market borrowing

Plans to hold 26-weekly auctions over first half comprising dated securities spread over 3, 5, 7, 10, 15, 30, 40 and 50 years, with Rs 12,000 crore to be raised through sovereign green bonds

Our Special Correspondent Mumbai Published 28.03.24, 10:28 AM
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The central government seeks to mobilise Rs 7.5 lakh crore (trillion) through market borrowing in the first half of the next fiscal year. The government plans to borrow Rs 14.13 lakh crore in 2024-25 against Rs 15.43 lakh crore a year ago.

A finance ministry statement said the government will issue 15-year paper for the first time.

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It plans to hold 26-weekly auctions over the first half comprising dated securities spread over 3, 5, 7, 10, 15, 30, 40 and 50 years, with Rs 12,000 crore to be raised through sovereign green bonds.

The Centre introduced the 50-year security in the second half of the current fiscal, which received a good response from insurers. It had sold Rs 30,000 crore of these bonds.

The borrowing calendar announced by the RBI showed that Rs 1.52 lakh crore will be raised between April and early May.

A year ago it raised Rs 8.88 lakh crore in the first half.

“The sharp 15.5 per cent fall in the Government of India’s gross supply in the first half of the fiscal, along with the bond index inclusion starting end-June 2024, is expected to augur well for G-sec yields. Icra expects the 10-year yield to trade between 6.8 per cent and 7 per cent in the first half of the fiscal,” Aditi Nayar, chief economist, Icra, said.

The Centre will issue 4.80 per cent dated securities of three-year tenure, 9.60 per cent of five years, 8.80 per cent of seven years, 25.60 per cent of 10 years, 13.87 per cent of 15 years, 8.93 per cent of 30 years, 19.47 per cent of 40 years and 8.93 per cent of 50-year tenure.

Further, the weekly borrowing through the issue of treasury bills (a short-term instrument) in the first quarter 2024-25 is expected to be Rs 27,000 crore for the first seven auctions and Rs 22,000 crore for the subsequent six auctions.

The government will continue to reserve the right to exercise the greenshoe option to retain an additional subscription of up to Rs 2,000 crore against each of the securities indicated in the auction notifications.

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