Govt Outlines Rs 8 Trillion Borrowing Plan For First Half Of Fiscal Year 2026

(MENAFN- KNN India) New Delhi, Mar 28 (KNN) The government has unveiled its comprehensive borrowing strategy for the first half of fiscal year 2026, planning to raise Rs 8 trillion through dated securities via 26 weekly auctions.

This ambitious plan represents 54 per cent of the full-year borrowing target and includes Rs 10,000 crore in sovereign green bonds, as announced by the finance ministry on Thursday.

The borrowing will be strategically distributed across multiple maturity periods, ranging from 3 to 50 years. The allocation spans various durations including 3-year, 5-year, 7-year, 10-year, 15-year, 30-year, 40-year, and 50-year.

This diversified approach allows the government flexibility in managing its debt profile and responding to market dynamics.

In a notable provision, the government has reserved the right to exercise a greenshoe option, enabling additional fund mobilisation of up to Rs 2,000 crore for each security indicated in auction notifications.

The ministry also confirmed its intention to conduct securities switching and buyback operations to optimise the redemption profile and manage debt more efficiently.

To address temporary financial fluctuations, the Reserve Bank of India (RBI) has set the Ways and Means Advances (WMA) limit for the first half of fiscal year 2025-26 at Rs 1.50 lakh crore.

These short-term credit facilities help government entities manage cash flow inconsistencies and maintain financial stability.

The borrowing plan is critically important, as it directly influences fiscal management, market liquidity, and interest rates. Aligned with the latest Union budget, the government aims to reduce central government debt to approximately 50 per cent of gross domestic product by March 31, 2031.

Fiscal projections indicate continued progress in deficit management. The fiscal deficit for FY26 is estimated at Rs 15.6 trillion, representing 4.4 per cent of nominal GDP-a marginal improvement from the previously committed 4.5 per cent.

In the current fiscal year (FY25), the government expects to limit the fiscal deficit to 4.8 per cent of GDP, slightly better than the original 4.9 per cent estimate.

This strategic approach demonstrates the government's commitment to prudent financial management and economic stability in the evolving fiscal landscape.

(KNN Bureau)

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