India to borrow $90 billion in first half of fiscal

The government is aiming to borrow ₹7.5 trillion (about $90 billion) from the market in the April to September period, the finance ministry said on Wednesday.

The borrowing plan for the period is 53% of the budgeted ₹14.13 trillion for the full fiscal year, the ministry said in a statement.

During the budget, Union finance minister Nirmala Sitharaman had proposed to borrow the amount by issuing dated securities in a bid to tide over the revenue shortfall next fiscal.

The next fiscal’s borrowing plan is lower than the current fiscal’s ₹15.43 trillion.

Based on market feedback and in line with global practices, the government said it has decided to introduce a new dated security of 15-year tenor.

The government will borrow ₹7.5 trillion over 26 weekly auctions, dividing it among bonds that mature in 3, 5, 7, 10, 15, 30, 40, and 50 years.

The percentage of the total borrowing for each maturity is as follows: 3-year bonds will be 4.80%, 5-year 9.60%, 7-year 8.80%, 10-year 25.60%, 15-year 13.87%, 30-year 8.93%, 40-year 19.47%, and 50-year also 8.93%.

The government plans to borrow ₹3.21 trillion between April-June via the sale of Treasury bills.

In the first quarter, the government plans to borrow ₹27,000 crore from the first seven weekly auctions and ₹22,000 crore from the next six.

Initially, each week, the government will issue ₹12,000 crore in 91-day bills, ₹7,000 crore in 182-day bills, and ₹8,000 crore in 364-day bills. In the later six auctions, these amounts will change to ₹10,000 crore, ₹5,000 crore, and ₹7,000 crore, respectively.

The borrowing plan for the first half of the fiscal is lower, according to some analysts, in view of the elections and the moral code of conduct being in place.

The borrowing is lower as the Centre doesn’t want to sit on unused cash, Union finance secretary T.V. Somanathan told reporters in New Delhi.

The Reserve Bank of India is scheduled to meet on 5 April to decide on the interest rates.