Indian government borrowing will be as per budget, says economic affairs secy

India's economic affairs secretary, Ajay Seth, on Tuesday (September 26) said that the government has no intentions of reducing or surpassing its FY24 market borrowing of Rs 15.43 lakh crore.

Addressing a question from CNBC-TV18 regarding potential reductions in market borrowing, given the strong performance of small savings collections, Seth said, "Estimates at this point in time are showing we can manage our market borrowings as indicated in the budget, we don’t have to overshoot it, we do not see as much under requirement as well."

Providing insight into the small savings accrual, Seth explained, "Four months of small savings collection is roughly a third of the annual target. I would not like to draw any firm conclusion out of four months. Small savings repayments would vary from month to month. By and large, it was felt whatever the budget estimates are we will go by that."

Out of the gross market borrowing projection of Rs 15.43 lakh crore for FY 2023-24, the government has committed to borrowing the remaining amount of Rs 6.55 lakh crore (42.45 percent of Rs 15.43 lakh crore) in the second half of the fiscal year 2023-24 (H2: FY 2023-24) through dated securities. This includes Rs 20,000 crore through the issuance of Sovereign Green Bonds (SGrBs).

Seth announced the government's plan for a larger issuance of Sovereign Green Bonds in FY24, building upon the positive market response witnessed in the previous year. The government intends to initiate this year's green bond borrowings in the upcoming quarter.

Following the dated securities calendar, the government aims to kickstart its initial tranche of green bonds for FY24 between November 6-10, amounting to Rs 5,000 crore. This will be followed by three more tranches of equal amounts but with different maturities.

Addressing inquiries about the newly introduced 50-year government security, Seth revealed that market interactions with the government and RBI have revealed a strong interest from various investors in long-term papers, surpassing the 40-year paper duration previously issued. Seth viewed this as a testament to the robust confidence investors have in the Indian economy.

Furthermore, Seth said that the government's fiscal trends in terms of revenues, expenditures, and other borrowings have aligned with the budget estimates set in February. The government is steadfast in adhering to these budget numbers, underscoring its commitment to maintaining a fiscal deficit of 5.9 percent.