India Plans Rs 8 Lakh Crore Borrowing In First Half Of FY26, Lower Than Estimates

The Ministry of Finance said on Thursday that the Indian government, in consultation with the Reserve Bank of India, has set its borrowing target for the first half of the fiscal 2025-26 at Rs 8 lakh crore, lower than Bloomberg's estimate of Rs 8.4 lakh crore. This also compares with Rs 7.4 lakh crore planned in the same period last year.

The government's total gross market borrowing for the next fiscal is budgeted at Rs 14.82 lakh crore, with 54% of this amount to be raised in the first half through the issuance of dated securities, including Rs 10,000 crore worth of Sovereign Green Bonds, according to a statement.

This borrowing plan is crucial as it determines how the government will finance its fiscal deficit and manage expenditure, including capital spending on infrastructure and social schemes. A lower-than-expected borrowing target could signal fiscal prudence, potentially easing pressure on bond yields and leaving more room for private sector borrowing.

The government's ability to raise funds efficiently through bond markets also affects liquidity conditions and borrowing costs across the economy.

The borrowing will be conducted through 26 weekly auctions across various maturities—3-year (5.3%), 5-year (11.3%), 7-year (8.2%), 10-year (26.2%), 15-year (14.0%), 30-year (10.5%), 40-year (14.0%), and 50-year (10.5%), the statement said, adding that the government will also carry out bond switches and buybacks to manage its debt redemption profile.

A greenshoe option will allow the government to retain an additional Rs 2,000 crore in each auction. Treasury bill issuance in first quarter of the fiscal 2026 is set at Rs 19,000 crore per week, with Rs 9,000 crore from 91-day T-bills, Rs 5,000 crore from 182-day T-bills, and Rs 5,000 crore from 364-day T-bills.

To address temporary mismatches in government accounts, the RBI has set the Ways and Means Advances (WMA) limit at Rs 1.50 lakh crore for the first half.