The Government of India, in coordination with the Reserve Bank of India, has concluded its borrowing strategy for the first six months (April-Sept) of the fiscal year 2024-25.
Of the total Gross Market borrowing estimated at Rs 14.13 lakh crore for FY 2024-25 as outlined in the Union budget, Rs 7.50 lakh crore (53.08 percent) is earmarked to be acquired during the first half via dated securities, inclusive of Rs 12,000 crore through the issuance of Sovereign Green Bonds (SGB). In response to market insights and aligned with international market norms, a new 15-year tenor dated security will be introduced.
The planned gross market borrowing of Rs 7.50 lakh crore will be executed through 26 weekly auctions. This borrowing will be distributed across various maturities spanning 3, 5, 7, 10, 15, 30, 40, and 50-year securities. The distribution of borrowing (including SGB) across different maturities will be as follows: 3-year (4.80 percent), 5-year (9.60 percent), 7-year (8.80 percent), 10-year (25.60 percent), 15-year (13.87 percent), 30-year (8.93 percent), 40-year (19.47 percent), and 50-year (8.93 percent).
The Government will continue its practice of switching securities to ensure a balanced redemption profile and retain the option to exercise the greenshoe option to retain an additional subscription of up to Rs 2,000 crore against each of the securities mentioned in the auction notifications.
Weekly borrowing through the issuance of Treasury Bills in the first quarter (Q1) of FY 2024-25 is anticipated to amount to Rs 27,000 crore for the initial seven auctions and Rs 22,000 crore for the subsequent six auctions, resulting in a net borrowing of Rs (-) 3,000 crore during the quarter. Weekly issuances will include Rs 12,000 crore under 91-day T-Bills, Rs 7,000 crore under 182-day T-Bills, and Rs 8,000 crore under 364-day T-Bills in the first seven auctions. In the subsequent six auctions, there will be weekly issuances of Rs 10,000 crore under 91-day T-Bills, Rs 5,000 crore under 182-day T-Bills, and Rs 7,000 crore under 364-day T-Bills.
To address temporary imbalances in Government accounts, the Reserve Bank of India has set the Ways and Means Advances (WMA) limit for H1 of FY 2024-25 at Rs 1.50 lakh crore. The Central bank may initiate fresh floatation of market loans when the Government of India utilizes 75 percent of the WMA limit. The Reserve Bank of India, in collaboration with the Government of India, maintains the flexibility to adjust the limit at any time, considering the prevailing circumstances.
