The Centre will borrow Rs3.6 lakh crore from markets in the first half of the forthcoming fiscal (2015-16), and these borrowings will be done through issuance of long-term bonds of 40 years duration. The borrowing amount will be slightly above 50 per cent of the annual target of Rs6 lakh crore. “We will issue long-term bonds of 40 years in early next financial year. It will help us in the long run and will provide stability in the system,” Finance Secretary Rajiv Mehrishi told reporters on Monday.
The total borrowing in the first six months would be to the tune of Rs3.6 lakh crore, he added. The Government borrows money from the markets through T-bills and other instruments to fund its fiscal deficit. Giving details of borrowing programme for 2015-16, he said that the Centre would be borrowing about Rs17,000-18,000 crore through bonds every week.
The calendar for market borrowing was decided at a meeting between officials of the Finance Ministry and Reserve Bank (RBI). The net borrowing in the first half of the current fiscal would, however, be Rs2.25 lakh crore, Mehrishi said, adding “Government will issue concept paper on switching (of Government bonds) in 15 days.” The Government, as per the budget papers, plans to borrow Rs6 lakh crore from the market in the next fiscal, up from Rs5.92 lakh crore in 2014-15.
However, the net borrowings in 2015-16 will be Rs4.56 lakh crore, after considering repayments of past loans and interest, as per budget documents. The budgeted target for borrowing in current fiscal was also Rs6 lakh crore, but it is likely to remain at around Rs5.92 lakh crore. In the financial year ending March, the fiscal deficit has been estimated at 4.1 per cent. In 2015-16, the deficit will be pruned to 3.9 per cent.