The Union government has decided to borrow Rs 3.49 lakh crore during the first half of next fiscal, which translates into 58 per cent of the total borrowing programme of Rs 5.79 lakh crore.
Arvind Mayaram, the economic affairs secretary, said that borrowing programme includes inflation-indexed bonds worth Rs 12,000-20,000 crore that finance minister P Chidambaram announced in the budget for fiscal 2014. The inflation indexed bonds will be issued from April 1 in tranches of Rs 2,000-3,000 crore.Besides, the average borrowing size per week is expected to be Rs 15,000 crore.
Analysts were expecting a little lower borrowing target for the first half but still bond dealers said that the target was at least lesser than previous years and the good redemption expected in September will certainly ease the pressure. Starting September 3, the government is expected to redeem bonds worth Rs 46,000 crore that were issued in 2002.
Analysts said that redemption will ease pressure on liquidity in bond market while making the banks buy fresh debt to meet SLR norms.
FM P Chidambaram had estimated a record Rs 6.29 trillion of gross borrowing in FY'14 including buybacks and switches during the year. FM plans to bring the fiscal deficit down to 4.8 per cent of GDP in FY'14 from around 5.2 per cent currently.