FinMin may borrow 60% from market for H1, switch bonds up to Rs 70k cr

New Delhi: The Finance Ministry may borrow around 60 per cent of the Rs 7.1 lakh crore budgeted gross borrowings for fiscal 2019-20 in its first half (H1) from the market to meet part-redemption, expenditures for welfare schemes and keep the fiscal deficit in check.

“H1 borrowing could be 50-60 per cent of the gross borrowing. We are looking at a borrowing of about Rs 4.3 lakh crore in H1,” said a source.

The government had borrowed just 47.5 per cent of its budgeted full-year target (gross) through bonds in the first half of 2018-19 — much lower than the 60-65 per cent in the corresponding period over the previous five years — and had dipped more into the National Small Savings Fund (NSSF) to finance the fiscal deficit as it sought to ease pressure on the bond market that has witnessed a spurt in yield that time.

This may not happen this fiscal as this is a poll year and expenditures related to welfare schemes like the direct income for farmers will be executed in the first half, so funds would be needed even though these are budgeted expenditures.

The ministry also may ‘switch’ up to Rs 70,000 crore of bonds to manage the Rs 2.37 lakh crore redemption pressure in the next fiscal and also will seek the Reserve Bank of India’s (RBI) open market support in a large-scale amount to contain the bond yields and maintain liquidity. (IANS)

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