Govt to borrow Rs 3.5 L cr in first half of FY17

The amount is 60% of the total borrowing requirement in 2016-17

The government will borrow Rs 3.55 lakh crore, or 59.2 per cent of the total borrowing requirement, in the first half of the next financial year (FY17).

This is in line with the standard practice to front-load borrowings in the first half of the financial year, so that the second half remains relatively free for the private sector to borrow.

The Union Budget had estimated the total borrowing at Rs 6 lakh crore. Net of redemptions, the borrowing was pegged at Rs 4.2 lakh crore.

In the first half of FY17, bonds worth Rs 1.068 lakh crore are getting redeemed, making the first half net borrowing Rs 2.5 lakh crore.

Most weekly auctions will be of Rs 15,000 crore, but at the end of the first half, the borrowing sizes will be Rs 14,000 crore a week, the auction calendar showed. The borrowings will be done by bonds maturing in five years or more.

"Overall, the first half borrowing and weekly auction amount is comfortable, but bulging supply pressure on 10-year benchmark (50 per cent of weekly borrowing) will remain a cause of concern. This, along with the entire large state loan issuance at the 10-year bucket, might create fatigue and would likely exert pressure on yield curve," said Soumyajit Niyogi, associate director of credit and market research at India Ratings.

In addition to the dated borrowings, the government will borrow Rs 27,000 crore in April-June through treasury bills that are maturing within a year.

Economic Affairs Secretary Shaktikanta Das said in a press meet in New Delhi that the government had decided to set up a cash coordination committee under the chairmanship of joint secretary (Budget) comprising officers from the finance ministry, Reserve Bank of India and Controller General of Accounts.

"The committee would meet at least once a month and review the cash position of the government and will ensure coordination and joint review by the finance ministry and RBI beginning April 1," said Das.

"Cash coordination committee is a welcome move. It will enable prompt decision-making over weekly auction according to the government's cash position," said Niyogi.