The Centre has finalized the plan of borrowing around ₹5.03 lakh crore from the market in the next half of the financial year ending March 2022 (FY22) in consultation with the Reserve Bank of India for the H2(October 2021 to March 2022). The Ministry of Finance said in a release, “Borrowing in H1 has been completed smoothly with weighted average yield at 6.19 % and weighted average maturity at 16.69 years. In H1, good demand for government bonds was seen from all major investor segments and the yields have remained stable.”
The government has planned its second half borrowing which is likely to be conducted in 21 weekly tranches of ₹23,000-24,000 crore. They have decided to spread under 2, 5, 10, 14, 30 and 40 year-securities along with Floating Rate Bonds (tenor of 7-8 and 13 years).The government also said, “Out of the budgeted borrowing figure of ₹7.24 lakh crore in the first half (H1), around ₹7.02 lakh crore was completed.”
The Centre has decided that the Borrowing under floating rate bonds will be 8.8 %. The government has planned to issue another floating rate bond of 7-8 years, in addition to 13-year. Both are said to be issued on an alternate basis.
The government also quoted that it will continue to carry out switching of securities to smoothen redemptions in coming years. Addition to this, the Ministry of finance also said that The projection for second half borrowing figure also factors requirements for release of balance amount of GST compensation to states.
It is to be noted that the share of borrowing under different maturities will be: 2 years – 4%; 5 years – 11.9 %; 10 year – 28.4 %; 14 year – 17.9 %; 30 year – 13.9 % and 40 year – 15.1 %.