securities

For the second half of the current fiscal year, the Centre will borrow Rs 6.55 trillion, or 42.45 per cent of its total gross market borrowing of USD 15.43 trillion for the entire FY24. The finance ministry announced in a statement on Tuesday that the borrowing will be done through dated securities, including Rs 20,000 crore through the issuing of Sovereign Green Bonds.

The government would continue to borrow according to its annual borrowing plan, but in response to market demand for longer-duration securities, the ministry stated, it will issue 50-year securities for the first time.

According to the ministry, the borrowing programme is decided upon after consultation with the RBI. In FY 2024, the Centre has budgeted a Rs 15.43 trillion gross market borrowing. Through 20 weekly auctions, spanning throughout securities with maturities of 3, 5, 7, 10, 14, 30, 40, and 50 years, with various shares, the borrowing for the second half of the year will be completed.

In her budget address for FY24, finance minister Nirmala Sitharaman predicted a fiscal deficit of USD 17.86 trillion, or 5.9 per cent of the nominal gross domestic product (GDP), for the year. By FY26, the Centre wants to have a budget deficit that is less than 4.5 per cent of GDP. The borrowing portion (including sovereign green bonds) will be distributed as follows: 3 years (6.11 per cent), 5 years (11.45 per cent), 7 years (9.16 per cent), 10 years (22.90 per cent), 14 years (15.27 per cent), 30 years (12.21 per cent), 40 years (18.32 per cent), and 50 years (4.58 per cent).

Securities will be switched in order to even out the redemption profile. Switch auctions totaling Rs 51,597 crore out of the Rs 1 trillion budgeted switch amount have already been held. The remaining switch auctions will take place in the second half.