FinMin frontloads FY16 borrowing;RBI says huge supply of bonds

As they scotch murmurs of their 'differences' over public debt management, the government today frontloaded its market borrowing for next fiscal with plans to raise Rs 3.6 lakh crore in the first half, even as RBI voiced concern over a "huge supply" of government bonds.
Announcing the government borrowing programme for the new fiscal, the Finance Ministry said that 60 per cent of the total Rs 6 lakh crore amount would be raised in the first half through issuance of bonds and treasury bills.
The total market borrowings are higher than Rs 5.92 lakh crore estimated for the current fiscal, ending this month.

The announcement came on a day when RBI Deputy Governor R Gandhi said in Mumbai that the rise in government borrowings through bonds was impeding the growth of corporate debt market.
He said that a huge supply of government paper was one of the major impediments to the growth of corporate bonds.
There has been a debate over 'differences' between RBI and the government, ever since it was proposed to shift public debt management function of RBI to a new agency.

Finance Minister Arun Jaitley, however, said yesterday that there was no "disconnect" between the government and the RBI, while the central bank Governor Raghuram Rajan favoured keeping the proposed Public Debt Management Agency independent of the two.

The government borrows money from the markets through T-bills and other instruments to fund its fiscal deficit.
After a meeting between the officials of Finance Ministry and the RBI, it was also decided to issue 40-year bonds, the first of its kind, early next fiscal as part of the borrowing programme.
"We will issue long-term bonds of 40 years in early next financial year. It will help us in the long run and will provide stability in the system," Finance Secretary Rajiv Mehrishi told reporters here.
He said the borrowing has been frontloaded to manage expense and redemption of earlier loans.

The total borrowing in the first six months would be to the tune of Rs 3.6 lakh crore, he said, adding the government will be raising Rs 64,000 crore in April itself.
The central government would be borrowing about Rs 14,000-16,000 crore through bonds every week during April-September period.