Centre keeps borrowing plan unchanged for H2FY24, introduces 50-year bond

The government plans to borrow Rs 6.55 lakh crore through bond issuances in the October-March period, the central bank said on Tuesday, as it introduced a new security with a 50-year tenure. India plans to raise Rs 30,000 crore through the newly introduced 50-year bond.

Centre has projected gross market borrowing at Rs 15.43 lakh crore for the current fiscal year ending March 31, 2024, of which it has borrowed Rs 8.88 lakh crore between April and September.

The government said the borrowing will be done through bonds with tenures of three, five, seven, 10, 14, 30 and 40 years.

The borrowing plan for the second-half of the fiscal year will include issuance of government green bonds worth Rs 20,000 crore, including a new 30-year security, it said.

"There are several investors who are interested in longer term paper..This is an indication that there is strong confidence in the economy," Economic Affairs Secretary Ajay Seth told reporters after the plan was announced.

Government plans to borrow between Rs 30,000 crore and Rs 39,000 crore a week in the second half of the fiscal year. 

Since 2019, the Indian government's borrowings have risen to fund a widening fiscal deficit due to record social spending during the pandemic.

The government is targeting a fiscal deficit of 5.9% for the current year, lower than 6.4% last year.

"Overall commitment to stick to the fiscal deficit number announced, absolutely remains," Seth said. 

The Reserve Bank of India has fixed the Ways and Mean Advances, which are temporary advances given by the central bank to governments to tide over any financing gaps, for the Oct-March period at Rs 50,000 crore, the government said.