The Government of India has announced its borrowing roadmap for the second half of fiscal year 2025-26, unveiling a plan to raise ₹6.77 lakh crore through dated securities between October 2025 and March 2026. This is part of the full-year target of ₹14.82 lakh crore, aligned with the fiscal deficit goal of 4.4% of GDP. The borrowing strategy emphasizes a balanced maturity profile, reduced reliance on ultra-long bonds, and includes ₹10,000 crore through Sovereign Green Bonds. Weekly auctions, Treasury Bill issuances, and cash management tools such as Ways and Means Advances form the backbone of this calibrated approach.
Borrowing Strategy in Context
The Finance Ministry, working alongside the Reserve Bank of India, has detailed its H2 borrowing plan to ensure market stability while adhering to fiscal discipline. By keeping the schedule transparent and spread across maturities from 3 to 50 years, the government seeks to minimize yield disruptions and instill confidence in both domestic and global investors.
This tranche completes the annual borrowing target of ₹14.82 lakh crore, which underpins the Centre’s fiscal deficit target of 4.4% of GDP. Stability in bond markets is crucial as India positions itself for sustained economic expansion, while ensuring public debt remains manageable.
Composition of Issuances
A total of 22 weekly auctions will be held until March 2026, with securities ranging from short-term notes to 50-year bonds. To address investor appetite and market signals, the government has reduced the share of 30-, 40-, and 50-year bonds from around 35% in H1 to 29.5% in H2.
Revised allocations are as follows:
3-year: 6.6%
5-year: 13.3%
7-year: 8.1%
10-year: 28.4%
15-year: 14.2%
30-year: 9.2%
40-year: 11.1%
50-year: 9.2%
This rebalancing is designed to flatten the yield curve, distribute redemption pressures, and offer instruments across risk profiles.
Green Bonds and Market Development
As part of the borrowing program, the government will issue ₹10,000 crore worth of Sovereign Green Bonds, underscoring India’s commitment to climate-aligned financing. These bonds are expected to attract ESG-focused investors and deepen India’s sustainable finance market.
Additionally, a greenshoe option of up to ₹2,000 crore per security has been provided, allowing flexibility to absorb higher demand during auctions. The government also retains the option of bond buybacks and switches to ease redemption pressures in coming years.
Short-Term Funding and Cash Management
Beyond dated securities, short-term Treasury Bills (T-bills) remain integral to liquidity management. For Q3, weekly issuances of T-bills will total ₹19,000 crore, split across 91-day, 182-day, and 364-day maturities.
The Ways and Means Advances (WMA) limit has been set at ₹50,000 crore, offering a buffer for temporary mismatches between revenues and expenditures. This mechanism ensures smoother government cash flows and reduces the risk of abrupt market interventions.
Risks and Market Outlook
While the borrowing plan is structured to ease supply pressures, risks persist. Elevated global yields, potential U.S. Federal Reserve policy shifts, and domestic inflation trends could impact investor demand and borrowing costs.
The cutback in ultra-long issuances reflects sensitivity to investor appetite and market stability, signaling a pragmatic shift in strategy. Maintaining fiscal credibility will depend on robust revenue collections and controlled expenditure growth.
Conclusion
The government’s H2 borrowing blueprint strikes a balance between fiscal responsibility and market pragmatism. By reducing ultra-long-term debt exposure, introducing green bonds, and maintaining auction transparency, the Centre aims to ensure funding needs are met without destabilizing bond markets. For investors, the roadmap offers clarity and diversified opportunities across maturities. For policymakers, it reflects a deliberate effort to safeguard fiscal credibility while sustaining India’s growth trajectory.
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