New Delhi: The government plans to borrow Rs 5.03 lakh crore ($68.15 billion) in bonds during the October-March period to fund revenue gap, it said in a statement on Monday. The government borrowed Rs 7.02 lakh crore in the April-September period. The Centre had already said it aimed to borrow Rs 12.06 lakh crore in bonds in the current financial year (FY 2021-22).
It also said that the second half projection also factors requirements for release of balance amount to states on account of back-to-back loan facility in-lieu of GST (Goods and Services Tax) compensation during the year.
The Centre added that the first half borrowing of Rs 7.02 lakh crore has been completed smoothly with weighted average yield at 6.19% and weighted average maturity at 16.69 years.
The statement also highlighted that the second half borrowing is likely to be conducted in 21 weekly tranches of Rs 24,000/23,000 crore. “Borrowing will be spread under 2, 5, 10, 14, 30 and 40 year-securities and floating rate bonds (tenor of 7-8 & 13 years). The share of borrowing under different maturities will be: 2 years: 4%; 5 years: 11.9 %; 10 year: 28.4 %; 14 year: 17.9 %; 30 year: 13.9 %; and 40 year: 15.1 %. Borrowing under Floating Rate Bonds will be 8.8 %,” the government further said.
The Centre also stated that it will issue another floating rate bond of 7-8 years, in addition to 13-year. “Both will be issued on alternate basis,” it added.
“To take care of temporary mismatches in the government account, the RBI has fixed the Ways and Mean Advance (WMA) limit for H2 at Rs 50,000 crore,” the central bank said.
The Reserve Bank said it may trigger fresh floatation of market loans when the government utilises 75% of the WMA limit. The RBI retains the flexibility to revise the limit at any time, in consultation with the Centre, taking into consideration the prevailing circumstances. The interest rate on WMA/overdraft will be for “WMA: Repo rate; and for overdraft: 2% above the repo rate.”
Repo rate is the rate at which the Reserve Bank lends to banks.