Govt to borrow Rs 4.88 lakh cr in first half of FY21: DEA Secretary Atanu Chakraborty


PTI | New Delhi | Updated: 31-03-2020 21:37 IST | Created: 31-03-2020 21:37 IST
Govt to borrow Rs 4.88 lakh cr in first half of FY21: DEA Secretary Atanu Chakraborty
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The government will borrow Rs 4.88 lakh crore in the first half of fiscal 2020-21 starting April 1 to shore up resources amid a war it is wagging to contain economic fallout of the coronavirus pandemic. The government has front-loaded borrowing as it proposes to raise nearly 63 per cent of total in the first half (April-September). "Out of gross borrowing of Rs 7.8 lakh crore, it is proposed to borrow 62.56 per cent (Rs 4.88 lakh cr) in H1 FY21 as compared to 62.25 per cent in H1 FY20,"  Economic Affairs Secretary Atanu Chakraborty said on Tuesday. Gross borrowing includes repayments of past loans. The borrowing plan has been drawn up keeping in view the anticipated demand because of the fully accessible route being opened for non-residents investors, he said.  In line with the Budget announcement, the Reserve Bank on Monday opened certain specified categories of government securities (G-Secs) for non-resident investors as part of an initiative to deepen the bond market. Finance Minister Nirmala Sitharaman had in her budget for 2020-21 pegged gross borrowing in the new financial year at Rs 7.8 lakh crore, higher than the Rs 7.1 lakh crore estimated in the current fiscal. Weekly G-Sec auctions of Rs 19,000-21,000 crore will be held as against Rs 17,000 crore in the current fiscal. Government paper of maturity 2, 5, 10, 14, 30 and 40 years will be issued, Chakraborty said. All the auctions covered by the calendar will have the facility of non-competitive bidding scheme under which 5 per cent of the notified amount will be reserved for the specified retail investors. Chakraborty also clarified that there will be borrowing in April as per the calendar agreed with RBI. About Rs 79,000 crore has been decided to be raised during April.

Besides, he said the government will not be directly selling bonds to the Reserve Bank of India (RBI) to meet its expenditure. With regard to short term treasury bills, he said weekly borrowing of Rs 25,000 crore will be made in the first quarter and the net borrowing will be Rs 1.37 lakh crore during April-June period. Wage and Means Advances (WMA) limit is proposed to be revised to Rs 1,20,000 crore and will be reviewed on a need-basis, compared to Rs 75,000 in H1 of FY 2019-20, he said. He also said that the annual maturity ceilings are being revised to accommodate higher issuances in 2020-21, from Rs 3.25-4.75 lakh crore to Rs 5-7 lakh crore. "Like in the past, the RBI in consultation with the Government, will continue to have the flexibility to bring about modifications in the calendar in terms of notified amount, maturities, etc. and to issue different types of instruments, including Floating Rate Bonds (FRBs), including CPI linked inflation linked bonds, depending upon the requirement of the Union government, evolving market conditions and other relevant factors," the central bank said in a statement. The RBI reserves the right to exercise the green-shoe option to retain additional subscription up to Rs 2,000 crore each against any one or more of the above security, which will be indicated in the auction notification.

However, it said, the exercise of the green-shoe option within one or more securities in an auction shall be within the overall notified amount for the auction. RBI further said it reserves the right to retain an additional amount up to Rs 20,000 crore, over and above the notified amount under the green-shoe option in the first half of 2020-21, depending upon the market developments and the additional amount will be set-off in second half. The RBI will also be conducting switches of securities through auctions on every third Monday of the month. In case third Monday is a holiday, switch auction will be conducted on the fourth Monday of the month.

Switches and buy-back combined will be at Rs 2.7 lakh cr for the whole year. "G-sec issuances through Debt ETF route is proposed to be rolled out soon by initiating appointment of required intermediaries. The budget announcement related to debt ETF would be operationalized in H2 of 2020-21," he said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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