The Business Bytes
THEBUSINESSBYTES BUREAU
NEW DELHI, MARCH 27, 2025
The Government of India will raise Rs 8 lakh crore from the bond market in the first half of the upcoming financial year (April-September 2025), constituting 54% of its total annual market borrowing of Rs 14.82 lakh crore, as outlined in the Union Budget 2025-26. The Finance Ministry announced this borrowing plan on Thursday, underscoring the Centre’s strategy to finance its expenditures while maintaining economic stability.
A key highlight of the borrowing programme is the issuance of Rs 10,000 crore worth of sovereign green bonds in the first half of the fiscal year. These bonds, aimed at financing environmentally sustainable projects, are part of the government’s commitment to fostering green economic growth.
The borrowing will be executed through 26 weekly auctions, involving government securities (G-Secs) with maturities ranging from 3 to 50 years. The planned spread of securities includes tenures of 3, 5, 7, 10, 15, 30, 40, and 50 years. To ensure a smooth redemption profile, the Centre will conduct security buybacks and switching operations as necessary.
To manage short-term liquidity mismatches in government accounts, the Reserve Bank of India (RBI) has set the Ways and Means Advances (WMA) limit at Rs 1.50 lakh crore for the first half of 2025-26. Additionally, the Centre intends to borrow Rs 19,000 crore weekly via Treasury bills (T-bills) in the first quarter of the financial year. Notably, more than 26% of the total market borrowings will be raised through 10-year government securities, which are a key benchmark for interest rates in the economy.
The government retains the option to exercise a greenshoe mechanism, allowing it to accept additional subscriptions of up to Rs 2,000 crore per security issuance. This flexibility helps in meeting excess demand in the market while managing borrowing costs efficiently.
The gross borrowing for 2025-26 is projected to be higher than the current fiscal year due to the scheduled repayment of Covid-19-related loans maturing during the financial year. The Centre’s gross borrowing for 2024-25 stood at Rs 14.01 lakh crore.
However, in net terms, the bond market borrowings for 2025-26 are estimated at Rs 11.54 lakh crore, equivalent to 3.2% of the GDP. This is slightly lower than the Rs 11.63 lakh crore net borrowing recorded in 2024-25.
The phased approach to market borrowings is designed to prevent excessive liquidity tightening, ensuring that private sector investments are not adversely impacted.
