New Delhi, March 27: Expressing its intent to borrow less compared to the budgeted amount, the Central government on Monday said it will borrow only Rs 2.88 lakh crore through its benchmark bond scheme in the first half (H1) of FY19.
“This makes 47.5 per cent of the total budgeted amount as against 60-65 per cent share in this period in previous years,” Economic Affairs Secretary Subhash Chandra Garg told the media.
The Central government uses its benchmark bond scheme, government securities or G-secs to raise funds from the open markets.
Garg said that during the first half of 2017-18, the government had borrowed Rs 3.72 lakh crore through G-Secs.
“This represents a substantial reduction compared to last year,” he said.
He added this would lead to lower overall borrowings compared to the budgeted amount. The government has budgeted gross G-sec borrowing of about Rs 605,539 crore for FY19.
“Certainly, this is no indication that we are pushing more towards the second half of the year. If you factor in additional loans, our second half would not be crowded. So there is no shift to the second half. It means that overall borrowings will be lesser,” Garg said.
He added that the government instead intends to use larger inflows from small savings schemes to fund its fiscal deficit during the year.
“We will borrow Rs one lakh crore from NSSF (National Social Security Fund) as against the budgeted amount of Rs 75,000 crore,” Garg said.
“The government has also decided to reduce buyback by Rs 25,000 crore.”
The government is also planning to issue more Floating Rate Bonds (FRBs) and introduce CPI-linked bonds.
“Both put together would amount to the extent of 10 per cent of issuances during the year,” he said.
The government will also introduce two benchmarks during this half year — 2-year and 5-year — to meet the market demand, he added.
“More issuance will be planned in short and long-term maturity bucket, reducing the issuance in medium term segments of 10-14 years to around 29 per cent, as against more than 50 per cent issuances in previous years,” Garg said.