The government is planning to increase its market borrowings to Rs 4.42 lakh crore in the first six months of FY20.

This would mean that Centre would be borrowing about Rs 17,000 crore per week.

The FY20 borrowing amounts to 62.3 per cent of the full year target. This is nearly 54 per cent higher than the Rs 2.88 lakh crore borrowed in the same period in FY19.

In FY19 government had completed only 47.56 per cent of its annual gross borrowing in H1.

The government's gross borrowing for FY20 is pegged at Rs 7.10 lakh crore, while net borrowings are seen at Rs 4.23 lakh crore.

"We will borrow Rs 4.42 lakh crore via Gilts in the H1 (April-September ) period of 2019-20 fiscal. This means we will borrow 62.3 per cent in the H1 and Rs 2.68 lakh crore in the H2 of FY20," Economic Affairs secretary Subhash Chandra Garg said.

Government normally completes about 60 per cent of its borrowings in April-September period of a financial year, when liquidity conditions are easier. However, in FY19 borrowings were pushed back as market conditions were adverse and bond yields were high.

Higher borrowings increase the supply of government bonds pushing up bond yields making market borrowing programme expensive.

In FY20, the higher gross borrowing is also on account of higher redemption pressure on its dated bonds.

Over the last two years, the government has tried to spread out the upcoming redemption pressure by switching existing bonds with longer tenor securities.

Published On : 30-03-2019

Source : Sme Times