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Government Retains Borrowing Target, Plans ₹6.61 Lakh Crore Borrowing in H2 FY 2024-25 to Bridge Revenue Gap
The Indian government has confirmed it will maintain its borrowing target for the current financial year, planning to raise ₹6.61 lakh crore through the auction of dated securities between October and March 2024-25. This move is aimed at funding the revenue shortfall while bolstering economic growth.
The Ministry of Finance announced, “Out of the gross market borrowing of ₹14.01 lakh crore budgeted for 2024-25, ₹6.61 lakh crore (47.2%) will be raised in H2 through the issuance of dated securities, including ₹20,000 crore of Sovereign Green Bonds (SGrBs).”
The planned borrowing of ₹6.61 lakh crore will be carried out through 21 weekly auctions, spread across securities with varying maturities from 3 years to 50 years. The share of borrowing under different maturities will include:
- 3-year (5.3%)
- 5-year (10.6%)
- 7-year (7.6%)
- 10-year (24.8%)
- 15-year (13.2%)
- 30-year (12.1%)
- 40-year (15.9%)
- 50-year (10.6%)
The government also plans to undertake switching or buyback of securities to smooth out the redemption profile and will retain the option to exercise the greenshoe option, allowing it to take an additional subscription of up to ₹2,000 crore in each auction, if needed.
Weekly borrowing through the issuance of Treasury Bills in Q3 of 2024-25 is estimated at ₹19,000 crore for 13 weeks. The breakdown includes ₹7,000 crore for 91-day treasury bills, ₹6,000 crore for 182-day treasury bills, and ₹6,000 crore for 364-day treasury bills.
To manage temporary mismatches in government accounts, the Reserve Bank of India has set the Ways and Means Advances (WMA) limit at ₹50,000 crore for H2 of FY 2024-25.
For the full year, the government has estimated a gross market borrowing of ₹14.01 lakh crore, with ₹7.4 lakh crore already raised in the first half (H1).
Finance Minister Nirmala Sitharaman initially proposed borrowing ₹14.13 lakh crore in the interim Budget but reduced the estimate by ₹12,000 crore in the final Budget, citing strong revenue collections.
This year’s gross borrowing estimate of ₹14.01 lakh crore is lower than last year’s ₹15.43 lakh crore, which was the highest-ever borrowing target. Sitharaman noted, “The gross and net market borrowings for 2024-25 are estimated at ₹14.01 lakh crore and ₹11.63 lakh crore, respectively—both figures lower than in 2023-24.”
Signs of private investment growth are emerging in sectors like steel and cement, driven by the government’s significant capital expenditure push. The government has earmarked ₹11.11 lakh crore for capital expenditure this year, compared to ₹10 lakh crore in 2023-24.
