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The government has been borrowing more money in the first half, to leave resources for corporates in the second half when they need the money more. Almost every week in a month, except for September, the government will go for market borrowing to mop up Rs 14,000-16,000 crore, according to the borrowing schedule given on Monday.
Once in every month, the government will also borrow through long-term papers, maturing over 20 years. In fact, some of these may go up to 40 years.
“We will issue long-term bonds of 40 years in early next financial year. It will help us in the long run and will provide stability in the system,” Finance Secretary Rajiv Mehrishi said after meeting with the Reserve Bank of India officials. Separately, an RBI release said it has also been decided to elongate maturity by issuance of security up to 40-year maturity. The current highest maturity is 30 years.
The government will borrow Rs 96,000 crore from more than 20-year papers which is 26 per cent of total borrowings planned for the first half. This year’s target of borrowing is higher than Rs 5.92 lakh crore, raised in 2014-15.
Net borrowing for the first half, through issue of bonds, is expected to be Rs 2.25 lakh crore, versus the full year target of Rs 4.56 lakh crore, Mehrishi said on Monday.
The government and Reserve Bank of India usually front-load to the tune of 60-65 per cent of the full year’s budgeted requirement.
Bond traders were expecting Delhi to front-load its market borrowings even further, raising as much as 67 per cent of the full-year target in the first six months, according to Reuters.
Mehrishi said about Rs 45,000 crore of short-term debt would be raised through treasury bills for the first half.
He also said the Centre plans to switch bonds worth Rs 50,000 crore. A bond switch is when existing holders are issued bonds of the same value but with a higher yield, in exchange for current holdings.
