Govt to borrow ₹6.77 trillion in H2; share of ultra-long-term bonds reduced

The Union finance ministry will borrow ₹6.77 trillion from the market in the second half (October-March) this current financial year, with annual borrowing for FY26 set to be ₹10,000 crore less than the Budget target.  

 

In the FY26 Budget, the government had announced borrowing ₹14.82 trillion. It has borrowed ₹5,000 crore less than the target in the first half (April-September) at ₹7.95 trillion and lowered the estimates for H2 (October-March) by a similar amount, taking the annual revised borrowing to ₹14.72 trillion. 

 

Borrowing in H2 includes issuing of ₹10,000 crore through sovereign green bonds (SGrBs). 

 

The ministry also lowered the share of long-duration securities of 30-50-year maturities from 34.6 per cent in H1 to 29.5 per cent in H2.

 

Talking to reporters Department Economic Affairs Secretary Anuradha Thakur said the government’s gross borrowing for FY26 was a shade lower than budgeted.

 

“Based on discussions with the RBI (Reserve Bank of India) and market feedback, the share of the long-duration securities has been reduced by about five percentage points,” Thakur said.

 

Thakur said the government was confident of meeting the fiscal deficit target of 4.4 per cent of gross domestic product and the borrowing calendar was an indication that the government was listening.

 

“Market borrowing is only one of the sources of financing … We are seeing very buoyant receipts of goods and services tax on a daily basis,” the secretary said.

 

Madhavi Arora, chief economist, Emkay Global Financial Services, said the market was keenly awaiting the tenor distribution of issues, with the expectation that the share of ultra-long (more than 30 years) tenors would continue falling, to account for long-term players’ demand peaking. “Near term, markets would cheer the supply-tenor adjustment in favour of the belly and this should help in bull-flattening of the Gsec curve,” she added. 

 

 

 

                                       

The finance ministry, while releasing the bond calendar, said borrowing would be through securities maturing in 3, 5, 7, 10, 15, 30, 40 and 50 years, with respective shares of 6.6 per cent, 13.3 per cent, 8.1 per cent, 28.4 per cent, 14.2 per cent, 9.2 per cent, 11.1 per cent and 9.2 per cent.

 

The government will carry out switching or buying securities to smooth the redemption profile. 

 

“The government will continue to reserve the right to exercise greenshoe option to retain an additional subscription of up to ₹2,000 crore against each of the securities indicated in the auction notifications,” the ministry added. 

 

To take care of temporary mismatches in government payments and receipts, the Reserve Bank of India has fixed the limit for ways and means advances for H2 at ₹50,000 crore.

 

Earlier this week, Chief Economic Advisor V Anantha Nageswaran had said that the government was confident on meeting the fiscal deficit target of 4.4 per cent in FY26, with the borrowing levels in the second half to remain unchanged.

 

The ministry announced weekly borrowing through treasury bills in the third quarter of FY26 was expected to be ₹19,000 crore for 13 weeks. There will be issues of ₹7,000 crore under 91-day bills, ₹6,000 crore under 182-day bills and ₹6,000 crore under 364-day bills, respectively. 

 

“As hitherto, all the auctions covered by the calendar will have the facility of non-competitive bidding under which five per cent of the notified amount will be reserved for the specified retail investors,” the finance ministry said.