Govt to borrow Rs 2.88 lkh cr in Apr-Sept; issue inflation indexed bonds

The government will borrow Rs 2.88 lakh crore in the April-September period of 2018-19, lower than Rs 3.72 lakh crore it had borrowed in the first half of the current fiscal, and introduce bonds linked to CPI or retail inflation.

Economic Affairs Secretary Subhash Chandra Garg said that, in consultation with the Reserve Bank, it has also decided to issue Government Securities (G-Sec) with 1-4 year maturity as demanded by primary dealers.

At a meeting with finance ministry officials last week, the dealers had suggested that the government out with shorter duration bonds as the likely change in interest rate by the RBI could have a bearing on long duration bonds.

The borrowing calendar for the first half of the 2018-19 fiscal was finalised at a meeting between finance ministry and RBI officials on Saturday.

Briefing reporters about the programme, Garg said Rs 2.88 lakh crore gross borrowing in the April-September period of next fiscal, is 47.56 per cent of the budgeted amount.

The government in the Budget has raised the gross borrowing to Rs 6.06 lakh crore, from Rs 5.99 lakh crore in current fiscal ending March 31.

"We are absolutely confident that we will be able to meet all expenditure without going into overdraft," he said.

The 47.56 per cent of budgeted gross market borrowing in the first half of next fiscal is lower than the average of 60-65 per cent in last five years.

The government borrows funds from money market to bridge the fiscal deficit. The deficit has been pegged at 3.3 per cent of GDP in 2018-19, lower than 3.5 per cent in current fiscal.

In the next fiscal, the G-Sec buyback would be reduced by Rs 25,000 crore. In addition to this, the government will withdraw up to Rs 1 lakh crore from the National Small Savings Fund (NSSF) -- Rs 25,000 crore more than in the current financial year -- to fund the fiscal deficit.

This could reduce the overall market borrowing programme of the government for the entire fiscal, Garg said.

To a question on whether the gross borrowing in next fiscal would be lower by Rs 50,000 crore, he said: "You can conclude that."
Asked as to when will RBI transfer additional dividend to the government, Garg said "Now there is 2-3 days left. So this would be coming."