The Centre intends to borrow ₹6.77 lakh crore in the latter half of the fiscal year 2025-26 (H2: FY 2025-26) through dated securities, including ₹10,000 crore from the issuance of Sovereign Green Bonds (SGrBs), as stated by the Finance Ministry on Friday. This gross market borrowing will be executed through 22 weekly auctions until March 6, 2026. The borrowing will be allocated across securities with maturities of 3, 5, 7, 10, 15, 30, 40, and 50 years. The distribution of borrowing (including SGrBs) across different maturities is as follows: 3-year (6.6 percent), 5-year (13.3 percent), 7-year (8.1 percent), 10-year (28.4 percent), 15-year (14.2 percent), 30-year (9.2 percent), 40-year (11.1 percent), and 50-year (9.2 percent).
The government will also engage in the switching or buyback of securities to manage the redemption schedule. Moreover, it retains the right to utilize the greenshoe option to accept an additional subscription of up to ₹2,000 crore for each of the securities mentioned in the auction announcements. Weekly borrowing via Treasury Bills in the third quarter (Q3) of FY 2025-26 is anticipated to be ₹19,000 crore over 13 weeks, with ₹7,000 crore from 91-day DTBs, ₹6,000 crore from 182-day DTBs, and ₹6,000 crore from 364-day DTBs, respectively. To address temporary discrepancies in government payments and receipts, the Reserve Bank of India (RBI) has set the Ways and Means Advances (WMA) limit for H2 of FY 2025-26 at ₹50,000 crore.
Dated government securities, or G-secs, are long-term bonds issued by the government to finance debt and fulfill expenditure obligations. These have a fixed maturity date, a fixed coupon (interest rate) paid semi-annually, and are redeemed at par upon maturity. An example is the 7.17 percent GS 2028, a Government of India security that pays a 7.17 percent coupon semi-annually and matures in January 2028. The government has finalized its borrowing strategy for the second half of FY 2025-26 in consultation with the RBI. The Centre aims to conduct its market borrowings gradually to prevent liquidity from being adversely affected for corporate sector investments, which could impede economic growth.
Excessive borrowing can lead to inflation and an increase in the fiscal deficit.