The central government has set an aim to raise ₹7.86 trillion through dated securities in the second half (October-March/H2) of 2026-27 (FY27), the calendar issued by the government on Friday showed.
Accounting for gilt issuance worth around ₹8.14 trillion in the first half (April-September/H1) of FY27, the government’s gross market borrowing is likely to be ₹16 trillion in the current year, around ₹1.2 trillion lower than the Budget Estimate of ₹17.2 trillion.
But the government’s gross market borrowing was already seen easing to ₹16.09 trillion in February itself after the government switched securities worth ₹1.11 trillion to roll over the debt redemption. This also brought down the repayment estimate for FY27 to ₹4.36 trillion from ₹5.47 trillion estimated in the Budget.
The government’s net market borrowing, which essentially goes into financing the fiscal deficit, remains at ₹11.73 trillion, as estimated in the Budget.
“Net market borrowing is kept at the Budget levels, implying that despite the incipient fiscal pressures, the government is committed to the path of fiscal prudence laid out in the Budget,” a finance ministry official said.
The borrowing plan for H2 comes amid hardening bond yields after a rate hike of 25 basis points by the US Federal Reserve. On Friday, India’s 10-year benchmark yield closed at 7.12 per cent.
The government has increased the share of longer-tenor securities in the borrowing plan for H2FY27.
The share of 15-year bonds has been hiked to 17.6 per cent from 14.5 per cent in H1, while the share of 30-year, 40-year, and 50-year securities has also increased. On the other hand, the share of five-year and 10-year securities has declined to 12.1 per cent and 26.3 per cent from 15.4 per cent and 29 per cent, respectively, in H1. The share of three-year securities also fell to 6.9 per cent from 8.1 per cent, while the seven-year share increased to 9.1 per cent from 8.1 per cent.
“The focus on the long end will help us increase our weighted average maturity (WAM), which had fallen during H1. A longer WAM will help reduce the roll-over risk,” the official said. “The government is managing its debt most prudently by resorting to switches/buybacks, etc., and is aiding the market by not piling on any additional pressure.”
The government will carry out the H2 borrowing plan through 23 weekly auctions, with each auction in the size of ₹33,000 crore to ₹36,000 crore. The government also aims to raise ₹15,000 crore through green bonds in H2.
“To take care of temporary mismatches in government accounts, if any, the Reserve Bank of India has fixed the Ways and Means Advances limit for H2 at ₹50,000 crore,” the government said in a press release. “The government will continue to carry out switching/buyback of securities to smooth the redemption profile.”
The government also released its short-term borrowing plan for the upcoming third quarter (October-December/Q3) on Friday. It aims to borrow ₹2.99 trillion through treasury bills in Q3.
The government has also shifted its fiscal anchor to the debt-to-gross domestic product (GDP) ratio from the deficit to strengthen the economy. It has set a target to bring its debt-to-GDP ratio to the range of 49-51 per cent by 2030-31. The central government recorded debt at 58.2 per cent of GDP, against the annual aim of 56.1 per cent.
But the announced borrowing plan does not necessarily imply that the budgeted amount of borrowing has definitely been brought down, said D K Srivastava, chief policy advisor at EY India.
“The government can always undertake supplementary borrowing if the conditions warrant it, which will be known only towards the end of the financial year. Much will depend on the inflow of tax and non-tax revenues and also on meeting the budgeted disinvestment targets, and a final picture will emerge only later during the year,” Srivastava added.
