Government to Borrow ₹8 Lakh Crore in First Half of FY26
The Indian government has announced plans to borrow ₹8 lakh crore through market borrowings in the first half of the financial year 2025–26 (FY26). This accounts for 54% of the total gross borrowing target of ₹14.82 lakh crore for the full fiscal year. The borrowing is aimed at meeting expenditure needs while managing market liquidity and supporting economic growth.
Borrowing Structure and Composition
The borrowing will be conducted through 26 weekly auctions of government securities, ranging in maturity from 3 to 50 years. This phased approach is intended to minimize market disruptions while offering a broad range of instruments to investors.
As part of this borrowing, the government will issue ₹10,000 crore worth of Sovereign Green Bonds (SGrBs). These funds will be earmarked for environment-focused projects, aligning with the government’s push towards sustainable development.
The distribution of borrowing across various maturities includes:
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3-year securities: 5.3%
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5-year securities: 11.3%
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7-year securities: 8.2%
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10-year securities: 26.2%
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15-year securities: 14.0%
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30-year securities: 10.5%
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40-year securities: 14.0%
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50-year securities: 10.5%
This diversified maturity mix is designed to optimize borrowing costs and spread out repayment obligations over time.
Fiscal Strategy and Green Push
The borrowing plan is part of the government’s broader fiscal roadmap, which aims to reduce the fiscal deficit to 4.4% of GDP in FY26 from 4.8% in FY25. The inclusion of green bonds reflects a strategic focus on climate-conscious financing, supporting renewable energy, clean transportation, and other green infrastructure initiatives.
To ensure smooth cash flow management, the Reserve Bank of India has set the Ways and Means Advances (WMA) limit at ₹1.5 lakh crore for the first half of FY26. This facility helps the government bridge short-term mismatches in revenue and expenditure.
Economic Implications
The borrowing strategy signals the government’s continued focus on balancing growth and fiscal prudence. While the large-scale borrowing may exert some pressure on bond yields, the structured approach and focus on long-term instruments are expected to aid market stability.
Investors are likely to respond positively to the green bond component, given the rising demand for sustainable investment opportunities. Overall, the borrowing blueprint reflects a calibrated effort to meet financial obligations while supporting the broader goals of development and environmental sustainability.
