The Indian government plans to raise Rs 8.88 lakh crore through market borrowing in the first half of the 2023-24 financial year to address the revenue gap and boost economic growth. The gross market borrowing for the entire fiscal year is estimated to be Rs 15.43 lakh crore, out of which 57.5% or Rs 8.88 lakh crore will be borrowed in the April-September period, according to an official statement by the Finance Ministry.
The borrowing will be spread over 26 weekly tranches of Rs 31,000-39,000 crore and will be issued in 3, 5, 7, 10, 14, 30, and 40-year securities. The Finance Minister had reduced the fiscal deficit to 5.9% of the GDP for the fiscal year 2023-24 from 6.4% in the current financial year.
To finance the fiscal deficit for the upcoming year, the net market borrowing from dated securities is estimated to be Rs 11.8 lakh crore, while the issuance of Sovereign Green Bonds will be announced in the second half of the fiscal year. The government plans to continue carrying out switch operations to smoothen the redemption profile.
The government reserves the right to exercise the green-shoe option to retain an additional subscription of up to Rs 2,000 crore against each of the securities indicated in the auction notification, according to the statement. The government and the Reserve Bank of India (RBI) will have the flexibility to bring about modifications in the calendar in terms of notified amount, issuance period, and maturities, and issue different types of instruments based on the government’s requirements and market conditions.
The calendar is subject to change, if circumstances warrant it, including intervening holidays. The RBI has also set the limit for Ways and Means Advances (WMA) for the first half of the financial year 2023-24 at Rs 1,50,000 crore, and may trigger fresh floatation of market loans when the government utilizes 75% of the WMA limit. The RBI retains the flexibility to revise the limit at any time in consultation with the government, taking into consideration the prevailing circumstances.