The government has maintained net market borrowings at Budget levels despite fiscal pressures, signalling its commitment to fiscal prudence. The H2 FY27 borrowing is set at Rs 7.86 lakh crore, focusing on longer-duration securities to manage debt.
The government has kept its net market borrowings for financing the fiscal deficit at the level provided in the Budget despite emerging fiscal pressures, signalling its commitment to fiscal prudence, Finance Ministry sources said on Friday.
“Net market borrowings, which are market borrowings for fiscal deficit financing, have been kept at the Budget levels, implying that in spite of the incipient fiscal pressures, the government is committed to the path of fiscal prudence laid out in the Budget,” a source said.
H2 FY27 Borrowing Plan
The comments came after the government announced its borrowing plan for the second half of FY 2026-27. According to the Ministry of Finance’s borrowing plan, the government will borrow Rs 7.86 lakh crore through dated securities in the second half of the current financial year.
Total market borrowing through dated securities during FY27 is expected at Rs 15.995 lakh crore, compared with the Budget Estimate of Rs 17.20 lakh crore.
Focus on Longer-Duration Securities
The sources also said that the government’s focus on longer-duration securities is aimed at increasing the Weighted Average Maturity (WAM) of its debt, which had declined during the first half of the financial year.
“The focus on the long end will help us increase our Weighted Average Maturity (WAM), which had fallen during H1. A longer WAM will help reduce the roll-over risk,” the source said.
A longer average maturity means the government gets more time before its debt needs to be repaid or refinanced, reducing refinancing pressure over shorter periods.
Maturity Profile of Securities
The H2 borrowing programme includes securities with maturities ranging from three years to 50 years. The largest share, 26.3 per cent, will be through 10-year securities, while 17.6 per cent will be through 15-year securities. The borrowing programme also includes 30-, 40- and 50-year securities.
Prudent Debt Management
The Finance Ministry sources further said the government was managing its debt through measures such as switches and buybacks while avoiding additional pressure on the market.
“The government is managing its debt in the most prudent manner by resorting to switches, buybacks, etc., and is aiding the market by not adding any additional pressure,” the source said.
The government’s borrowing plan also states that it will continue switching and buyback of securities to smoothen its redemption profile. The Rs 7.86 lakh crore H2 borrowing will be completed through 23 weekly auctions and includes Rs 15,000 crore of Sovereign Green Bonds. (ANI)
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