Govt Cuts FY27 Borrowing Target by ₹1.2 Trillion, Plans ₹7.86 Trillion Gilt Raise in H2

The Centre plans to raise ₹7.86 trillion through dated securities in the second half of FY27, from October to March, as per news reports.  

The borrowing calendar released on Friday showed that the government will conduct 23 weekly auctions, with each auction sized between ₹33,000 crore and ₹36,000 crore. 

Gross Borrowing Estimate 

The planned H2 issuance, along with around ₹8.14 trillion raised in the first half, takes gross market borrowing for FY27 to about ₹16 trillion.  

This is lower than the Budget estimate of ₹17.2 trillion by around ₹1.2 trillion. The revised figure is also put at ₹15.99 trillion, a reduction of ₹1.21 trillion. 

The reduction follows debt switches worth ₹1.11 trillion undertaken to roll over securities due for repayment. This has lowered the estimated repayment requirement for FY27 to ₹4.36 trillion from ₹5.47 trillion in the Budget. 

Net Borrowing Unchanged 

Net market borrowing, which is used to finance the fiscal deficit, remains at ₹11.73 trillion, the same as the Budget estimate. The government has also said it will continue switching and buying back securities during the second half to manage the redemption schedule. 

Longer Maturities 

The H2 borrowing mix has a larger allocation for longer-term securities. The share of 15-year bonds has increased to 17.6% from 14.5% in H1. The government has also increased the share of 30-year, 40-year, and 50-year securities. 

The allocation for five-year bonds has fallen to 12.1% from 15.4%, while the share of 10-year securities has declined to 26.3% from 29%. Three-year securities account for 6.9%, down from 8.1%, while seven-year securities rise to 9.1% from 8.1%. 

Green Bonds and Treasury Bills 

The government plans to raise ₹15,000 crore through green bonds in H2. For October-December, it has also planned ₹2.99 trillion of Treasury Bill borrowing. The government said weekly Treasury Bill borrowing during the quarter will be ₹23,000 crore. 

Other Measures 

The Ways and Means Advances limit for H2 has been fixed at ₹50,000 crore to meet temporary mismatches between receipts and expenditure. The government will continue debt switches and buybacks during the period. 

Read More: India’s Crude Import Spending Jumps 48% to $74.8 Billion in First 5 Months of FY27! 

Conclusion 

The H2 calendar lowers the overall FY27 gross borrowing requirement while keeping net borrowing at the Budgeted level. A larger share of the planned issuance will come from longer-maturity securities. 

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