India May Finalise ₹7.96 Lakh Crore H2 Borrowing Plan Next Week
Government officials are expected to finalise the October-March borrowing calendar as bond investors seek changes in the maturity mix amid RBI bond sales.
India is expected to finalise its ₹7.96 lakh crore gross borrowing programme for the second half of the current financial year next week, as policymakers prepare the government's bond issuance calendar for October through March.
Government officials are likely to meet next Friday to finalise the borrowing schedule, with an announcement expected after the discussions, according to people familiar with the matter cited by Reuters. (Moneycontrol)
The Centre plans to raise a total of ₹16.09 lakh crore through bond sales during the financial year. It has raised ₹7.79 lakh crore so far, while another ₹34,000 crore auction is scheduled before the end of the first half. That leaves around ₹7.96 lakh crore to be raised between October and March. (Moneycontrol)
The remaining amount also includes ₹6,500 crore that was not raised during a three-year bond auction on September 11.
Ahead of the borrowing calendar, market participants have been discussing the maturity structure of government debt. Many investors had favoured a larger share of shorter-duration three-year and five-year bonds, although the Reserve Bank of India's decision to conduct open-market bond sales has complicated those preferences. (Moneycontrol)
The RBI announced bond sales as part of efforts to absorb record liquidity in the banking system, which increased after dollar inflows from diaspora deposits exceeded expectations.
Market participants have also suggested reducing the issuance of 10-year securities or spreading their supply across more frequent auctions. During April-September, the RBI sold ₹34,000 crore of 10-year bonds every four weeks, accounting for around 29% of total issuance. (Moneycontrol)
Meanwhile, the share of three- and five-year securities increased to 23.5% during April-September, compared with 16.6% a year earlier. Some participants have also proposed increasing the share of ultra-long bonds with maturities ranging from 30 to 50 years.
The final borrowing calendar will therefore be closely watched by India's bond market, particularly for its potential impact on government bond supply, yields and borrowing costs during the second half of the financial year.