Centre to borrow ₹7.5 lakh crore in H1FY25, eyes ₹12,000 crore via green bonds
market through dated securities in the first half of FY25, which makes up 53.1% of the full-year target of 14.13 lakh crore, the finance ministry said on Wednesday.
The sum is lower than the usual borrowing of about 57-60% of the total for a fiscal year in its first half. This is in part due to the upcoming elections in April-May, when official spending is expected to decelerate a bit, experts said.
A lower borrowing target for the first half would have a benign impact on bond yields.
Of the projected borrowing, the government will raise ₹12,000 crore via sovereign green bonds in the first half of FY25, the ministry said.
Greenshoe option
It has also introduced a new dated security with a 15-year tenor, citing market feedback and global market practices. «The sharp 15.5% year-on-year fall in the government's gross supply (of papers) in the first half of FY25, along with the bond index inclusion starting end-June, is expected to augur well for G-sec yields,» Icra chief economist Aditi Nayar said. She expects yield on the 10-year G-secs to ease to 6.8-7% during the first half, from 7.07% on Wednesday.
JPMorgan has announced that it will include Indian government bonds in its widely tracked emerging market debt index, starting June 2024.
In the interim Budget last month, the government had reduced the FY25 gross market borrowing target to Rs 14.13 lakh crore from Rs 15.43 lakh crore in FY24, as it went on a fiscal consolidation drive.
The borrowing in the first half is scheduled to be over in 26 weekly
