Government plans Rs 7.5 lakh crore market borrowing in April-September

The finance ministry on Wednesday said that the government is set to embark on a gross market borrowing amounting to Rs 7.5 lakh crore during April-September period. The borrowing plan constitutes 53 per cent of the total estimate for the fiscal year, which begins on April 1, as outlined in the last budget before elections by Prime Minister Narendra Modi's administration.

In the 2024-25 budget, government unveiled a borrowing plan of Rs 14.13 lakh crore, marking a strategic shift towards fiscal prudence by prioritising deficit reduction over populist measures. The borrowing target announced on February 1 surprised the market with its moderation compared to previous years.

However, the current borrowing plan is interim, in effect until a new government assumes power following the upcoming national elections commencing on April 19. The incoming government will then present a fresh budget, shaping the fiscal trajectory for the remainder of the year.

The finance ministry disclosed that the government will introduce a new 15-year bond during the first half of the fiscal year, replacing the existing 14-year security. Borrowing activities will involve the issuance of bonds spanning various maturities, including three, five, seven, 10, 30, 40, and 50 years.

Furthermore, the government intends to offer Rs 12,000 crore worth of 10-year green bonds during the April-September period, aligning with its sustainability objectives.

In terms of fiscal management, the government aims to curtail the fiscal deficit to 5.1 per cent of the gross domestic output in 2024-25, down from 5.8 per cent recorded in the previous fiscal year.

Additionally, the Ways and Means Advances limit for the first half of the financial year has been set at Rs 1.50 lakh crore, providing a financial buffer for the government's short-term liquidity needs.

(With Reuters inputs)