FY21 gross market borrowing hiked 54% to Rs 12 lakh crore

MUMBAI: The government has raised the targeted levels of borrowings in the current fiscal by over 50 per cent as additional expenditure and funding needs to stimulate the economy hit by Covid-19 pandemic has pushed up need to mobilise resources.

Accordingly, the estimated gross market borrowing in the financial year 2020 -21 will now be Rs 12 lakh crore in place of Rs 7.80 lakh crore as per budget estimate for current year.

"The revision in borrowings has been necessitated on account of the COVID-19 pandemic," a Finance Ministry statement said.

With the change in borrowing plan for FY21, the government has also modified the indicative calendar for issuance of government dated securities for the remaining part of the first half of the fiscal 2020-21 in consultation with the Reserve Bank of India.

So, instead of H1 borrowing of Rs 4.88 lakh crore as per budget estimates, RBI will conduct auctions of dated securities worth Rs 6 lakh crore in the remainder of H1 between May 11 and September 30.

The calendar would include issuance of dated securities with maturity ranging from 4-40 years. It will also have auction of floating rate bonds.

Each block of auctions over a 5day period will be of Rs 30,000 crore.

All auctions covered by the H1 calendar will have the facility of noncompetitive bidding scheme under which five per cent of the notified amount will be reserved for the specified retail investors.

Like in the past, the Reserve Bank of India, in consultation with the government of India, will continue to have the flexibility to bring about modifications in the auction calendar in terms of notified amount, issuance period, maturities, etc. and to issue different types of instruments.

This will include instruments having non-standard maturity and Floating Rate Bonds (FRBs), including CPI-linked inflation linked bonds, depending upon the requirement of the government of India, evolving market conditions and other relevant factors, after giving due notice to the market, the statement said.

The Reserve Bank of India, in consultation with the Government of India, reserves the right to exercise the green-shoe option to retain additional subscription up to Rs 2,000 crore each against any one or more of the security, which will be indicated in the auction notification, the statement added.