India Likely To Stick To The Market Borrowing Plan For FY24

The government's first-half borrowing calendar is likely to remain unchanged, a senior finance ministry official told BQ Prime.

<div class="paragraphs"><p>Indian rupee. (Source: pexels Ravi Roshan)</p></div>
Indian rupee. (Source: pexels Ravi Roshan)

India's gross market borrowing for fiscal 2024 is likely to stay within the budgeted target of Rs 15.43 lakh crore.

The first-half borrowing calendar is likely to remain as announced; however, it is possible that the second-half borrowing may be slightly lower owing to healthy participation from small savings schemes, a senior finance ministry official told BQ Prime on the condition of anonymity.

The government is optimistic that the yield on 10-year government bonds will remain below 7% throughout H1 and doesn't foresee a need for increased borrowings over what has already been budgeted for the year from the market, the above-mentioned official said.

The first-half borrowing target was set at Rs 8.88 lakh crore by the Reserve Bank of India after consulting with the government. This is 57.55% of the gross market borrowing of Rs 15.43 lakh crore projected for FY24 in the union budget.

A key factor lending to this optimism includes healthy participation in small savings schemes such as Mahila Samman Savings Certificate and Senior Citizens Savings Schemes, the above-mentioned official told BQ Prime. The Mahila Samman Savings Certificate (MSSC) was announced in the budget in February this year as a new small savings scheme for women.

The receipt of the RBI surplus, according to economists, would help the government offset any fall in tax revenues or non-tax receipts and ease liquidity pressures. They maintain it is unlikely to aid faster fiscal consolidation.

The government has set 5.9% of GDP as the fiscal deficit target for FY24, with the glide path aiming to bring it below 4.5% of GDP by 2025–26.

To finance the fiscal deficit in 2023–24, the net market borrowing from dated securities is estimated at Rs 11.8 lakh crore. The balance of financing is expected to come from small savings and other sources.

The government is also likely to announce this year's issue of green bonds while releasing the second-half borrowing calendar by September-end. The centre is also slated to issue Rs 23,764.46 crore worth of sovereign green bonds, according to expenditure profile documents of the FY23 budget. The RBI, on behalf of the government, issued green bonds worth Rs 16,000 crore in 2022–2023, in two tranches.