Govt to borrow Rs 5.03 trn in H2FY22 to fund revenue gap: Finance Ministry

The government will borrow Rs 5.03 trillion in the second half of the current fiscal to fund the revenue gap for reviving the pandemic-hit economy, the finance ministry said on Monday.

During the first half, the government has raised Rs 7.02 trillion by issuing bonds, the ministry said in a statement.

"Out of gross market borrowing of Rs 12.05 trillion projected for FY 2021-22 in the Union Budget, Rs 7.24 trillion (60 per cent) was planned to be borrowed in first half (H1).

"The effective borrowing in H1 of FY 2021-22 was Rs 7.02 trillion. The Government now plans to borrow the balance Rs 5.03 trillion in second half year (H2) of FY 2021-22," it said.

"The government’s H2 borrowing amounting to Rs 5.03 trillion is likely to be conducted in 21 weekly tranches of Rs 24,000/23,000 crore.  Borrowing will be spread under 2, 5, 10, 14, 30 and 40 year-securities and Floating Rate Bonds (tenor of 7-8 & 13 years). The share of borrowing under different maturities will be: 2 years: 4%; 5 years: 11.9 %; 10 year: 28.4 %; 14 year: 17.9 %; 30 year: 13.9 %; and 40 year: 15.1 %. Borrowing under Floating Rate Bonds will be 8.8 %. The Government will issue another Floating Rate Bond of 7-8 years, in addition to 13-year. Both will be issued on alternate basis," said Ministry of Finance in a statement.

The H2 projection also factors requirements for release of balance amount to states on account of back-to-back loan facility in-lieu of GST compensation during the year, it added.

According to the Budget for 2021-22, the government's gross borrowing was estimated at Rs 12.05 trillion, while net borrowing was pegged at Rs 9.37 trillion in the financial year beginning April 1.

Gross borrowing includes repayments of past loans. Repayment for past loans in the next financial year has been pegged at Rs 2.80 trillion.

The government raises money from the market to fund its fiscal deficit through dated securities and treasury bills.

The Budget has pegged fiscal deficit at 6.8 per cent for the next fiscal, down from 9.5 per cent of the GDP in the current financial year.