Government plans to borrow ₹7.5 trillion in the April-September period of FY25

The government plans to borrow a whopping ₹7.5 trillion in the first half of the upcoming financial year, which starts in April. This borrowing will be through the issuance of government securities, along with ₹12,000 crore from sovereign green bonds.

Centre's borrowing plans for fiscal year 2024-25 is estimated to be around ₹14.13 trillion in the interim budget. This new announcement means more than half of that amount will be borrowed in the first six months of the fiscal year.

The government's borrowing plan, crafted in consultation with the Reserve Bank of India, involves introducing a new 15-year government security to entice investors. This move aims to raise ₹1.04 trillion in the first half of the fiscal year while managing the impact of government borrowing effectively.

To manage this borrowing process smoothly, the government will conduct 26 weekly auctions. The size of these auctions will vary, ranging from ₹22,000 crore to ₹38,000 crore each week. Additionally, the government will continue its practice of switching securities to balance its repayment schedule and may even retain more subscriptions if needed. The major reasons behind increased borrowing for April-September FY25 include infrastructure investments, economic stimulus, and ongoing fiscal requirements.

In the first quarter of the fiscal year, the government will issue treasury bills worth ₹27,000 crore for the first seven auctions and ₹22,000 crore for the next six. These treasury bills are short-term loans that the government takes from the public and promises to repay within a year.

These actions are part of the government's strategies for managing debt levels, which include diversifying borrowing instruments and adjusting auction sizes to meet short-term funding needs while maintaining overall fiscal stability.

To cover any temporary shortfalls in government accounts, the Reserve Bank of India has set a limit of ₹1.50 lakh crore for Ways and Means Advances for the first half of the fiscal year. This is like a temporary loan that the government can take from the central bank to meet its immediate needs.