Centre To Borrow Rs 5.03 Lakh Cr In Second Half Of FY 2021-22 To Fund Revenue Gap: FinMin

The Government’s second half-year borrowing amounting to Rs 5.03 lakh crore is likely to be conducted in 21 weekly tranches of Rs 24,000/23,000 crore.  

Nirmala Sitharaman

New Delhi: The Indian government, in consultation with the Reserve Bank of India, has finalised its borrowing programme for the second half (second half-year) of FY 2021-22 wherein it will borrow Rs 5.03 lakh crore to fund the revenue gap.

According to a statement by the finance ministry, out of gross market borrowing of Rs 12.05 lakh crore projected for FY 2021-22 in the Union Budget, Rs 7.24 lakh crore (60 per cent) was planned to be borrowed in the first half. 

The effective borrowing in the first half of FY 2021-22 is informed to be Rs 7.02 lakh crore. 

The finance ministry stated that the government now plans to borrow the balance of Rs 5.03 lakh crore in the second half of FY 2021-22.

The second half projection also factors requirements for the release of the balance amount to states on account of back-to-back loan facility in-lieu of GST compensation during the year.

"Borrowing in the first half has been completed smoothly with a weighted average yield at 6.19  per cent and weighted average maturity at 16.69 years. In the first half, good demand for government bonds was seen from all major investor segments and the yields have remained stable," the finance ministry stated.

The Government’s borrowing amounting to Rs 5.03 lakh crore in the second half is likely to be conducted in 21 weekly tranches of Rs 24,000/23,000 crore, it added.  

It was informed that the borrowing will be spread under 2, 5, 10, 14, 30, and 40 year-securities and Floating Rate Bonds (tenor of 7-8 & 13 years). The share of borrowing under different maturities will be: 2 years: 4 per cent; 5 years: 11.9  per cent; 10 year: 28.4  per cent; 14 year: 17.9  per cent; 30 year: 13.9  per cent; and 40 year: 15.1  per cent. Borrowing under Floating Rate Bonds will be 8.8  per cent.

The government will issue another Floating Rate Bond of 7-8 years, in addition to 13-year. Both will be issued on an alternate basis.  

Centre will continue to carry out switching of securities to smoothen redemptions in coming years.

Weekly borrowing under Treasury Bills in Quarter 3 of FY 2021-22 is expected to be Rs 20,000 crore with net borrowing of (-) Rs 1.04 lakh crore during the quarter. There will be issuance of Rs 10,000 crore under 91 DTBs, Rs 3,000 crore under 182 DTBs; Rs 7,000 crore under 364 DTBs during the quarter.

"To take care of temporary mismatches in the government account, the Reserve Bank of India has fixed the Ways and Mean Advance (WMA) limit for the second half at Rs 50,000 crore," the Finance Ministry stated.