The Centre plans to raise Rs 8.88 lakh crore through market borrowing in the April-September period of 2023-24 to fund the revenue gap to push economic growth, the Finance Ministry said on Wednesday.
Out of gross market borrowing of Rs 15.43 lakh crore estimated for FY2023-24, Rs 8.88 lakh crore or 57.5 per cent is planned to be borrowed in the first half (H1), an official statement said.
The borrowing is scheduled to be completed in 26 weekly tranches of Rs 31,000-39,000 crore, it said, adding that the borrowing will be spread under 3, 5, 7, 10, 14, 30 and 40-year securities.
Finance Minister Nirmala Sitharaman had in the Budget for FY24 reduced the fiscal deficit or the gap between expenditure and revenue to 5.9 per cent of the GDP for FY24 against 6.4 per cent in the current financial year.
To finance the fiscal deficit in 2023-24, net market borrowing from dated securities is estimated at Rs 11.8 lakh crore.
“The share of borrowing under different maturities will be 3 years (6.31 per cent), 5 years (11.71 per cent), 7 years (10.25 per cent), 10 years (20.50 per cent), 14 years (17.57 per cent), 30 years (16.10 per cent) and 40 years (17.57 per cent),” the statement said.
The issuance of Sovereign Green Bonds will be announced in the second half (H2) of FY 2023-24, it added.
The government will continue to carry out switch operations to smoothen the redemption profile.
The government will continue to exercise the green-shoe option to retain an additional subscription of up to Rs 2,000 crore against each of the securities indicated in the auction notification, according to the statement.
Weekly borrowing through issuance of Treasury Bills in the first quarter (Q1) of FY 2023-24 is expected to be Rs 32,000 crore, with net borrowing of Rs 1.42 lakh crore during the quarter against a net borrowing of Rs 2.40 lakh crore in Q1 of FY2022-23.
There will be the issuance of Rs 12,000 crore under 91 Dated Treasury Bills (DTBs), Rs 12,000 crore under 182 DTBs and Rs 8,000 crore under 364 DTBs through each weekly auction to be conducted during the quarter.
Like in the past, it said, the Centre/RBI will continue to have the flexibility to bring about modifications in the calendar in terms of notified amount, issuance period, maturities, etc. and to issue different types of instruments, including instruments having non-standard maturity, floating rate bonds (FRBs), CPI linked inflation-indexed bonds (IIBs) etc.
All these would depend upon the requirement of the government, evolving market conditions and other relevant factors, after giving due notice to the market, it said.
The calendar is subject to change, if circumstances so warrant, including for reasons such as intervening holidays, it added.
The government, in consultation with the Reserve Bank of India (RBI), reserves the right to exercise the green-shoe option to retain additional subscriptions up to Rs 2,000 crore against each of the securities indicated in the auction notification, it said.
The RBI will also be conducting switches of dated securities through an auction on the third Monday of every month or at more frequent intervals. In case the third Monday is a holiday, the switch auction will be conducted on the fourth Monday of the month, as per the statement.
It has been decided, in consultation with the government, that the limit for Ways and Means Advances (WMA) for the first half of the financial year 2023-24 (April 2023 to September 2023) will be Rs 1,50,000 crore, the RBI said in a separate statement.
The RBI may trigger fresh floatation of market loans when the government utilises 75 per cent of the WMA limit, it added.
The RBI retains the flexibility to revise the limit at any time, in consultation with the government, taking into consideration the prevailing circumstances.
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