Govt. to borrow ₹2.88 lakh cr. in H1, 48% of FY19 budget goal

The Centre would borrow ₹2.88 lakh crore in the April-September period of next fiscal, which is 47.56% of the budgeted gross borrowing. In April-September of the current fiscal, gross borrowing was ₹3.72 lakh crore.

Economic Affairs Secretary Subhash Chandra Garg said the government would issue inflation-indexed bonds linked to the CPI or retail inflation. Also, government securities of 1-4 years duration would be introduced. He said that the budgeted gross borrowing through bonds for fiscal 2018-19 was ₹6.05 lakh crore which would be used to fund the fiscal deficit of 3.3% of GDP. “We are absolutely confident that we will be able to meet all expenditures without going into overdraft,” Mr. Garg told reporters. The 47.56% figure in the first half is lower than the average of 60-65% in the last five years.

Mr. Garg said in the next fiscal the G-sec buyback would be pared by ₹25,000 crore. The Centre would also withdraw up to ₹1 lakh crore from the National Small Savings Fund — ₹25,000 crore more than in the current fiscal — to fund the fiscal deficit. This could cut overall market borrowing for the entire fiscal, he said.

‘Yields could ease’

“The market borrowing calendar... marks a departure from the front loading seen in recent years,” said Aditi Nayar, Principal Economist ICRA. Along with the change in proportion of issuance in various maturity buckets, it would help to cool bond yields, she added.

(With Manojit Saha

in Mumbai)