Regulator may pare G-sec buybacks
The government is likely to reduce its gross borrowing by around ~200 billion in the second half of the fiscal year, Business Standard has learnt. The reduction is likely to come in the form of fewer buybacks, with no expected change in issuances of government bonds. Officials of the finance ministry and Reserve Bank of India will meet in New Delhi on Friday to decide the borrowing calendar for October-March. The meeting will include Economic Affairs Secretary Subhash Garg, a RBI deputy governor, and officials of the ministry’s budget division and the central bank. “There are discussions on further reducing the scheduled buyback of bonds by around ~200 billion,” said an official. The person added that issuances of long-term G-secs would not be affected. ARUP ROYCHOUDHURY writes
The government is likely to reduce its gross borrowing by around ~200 billion in the second half of the fiscal year, Business Standard has learnt. The reduction is likely to come in form of fewer buybacks, with no expected change in issuances of government bonds.
Officials from the Finance Ministry and Reserve Bank of India will meet in New Delhi on Friday to decide the borrowing calendar for OctoberMarch. The meeting will include Economic Affairs Secretary Subhash Garg, a RBI deputy governor, and officials from the ministry’s budget division and the central bank.
“There are discussions on further reducing the scheduled buyback of bonds by around ~200 billion,” said an official. The person added that issuances of long-term G-secs will not be affected.
The Centre’s budgeted estimate for gross borrowing for 2018-19 is ~6.06 trillion. For the first half of the year (April-September), the Centre had announced the intention to borrow ~2.88 trillion, against market expectation of ~3.3-3.6 trillion.
This was done as the government ■ The Centre’s budgeted estimate for gross borrowing for 2018-19: ■ For April-September), the Centre had announced the intention to borrow
against market expectation of ~3.3-3.6 trillion
had moved to ease the pressure on the market considerably by reducing first half borrowing programme to 47.5 per cent of the total budgeted borrowing, against the normal practise
of 60-65 per cent.
To make up for reduced borrowing, the Centre said it would draw an additional ~250 billion from the National Small Savings Fund to finance the fiscal
■ To make up for reduced borrowing, the Centre said it would draw an additional ~250 billion from the National Small Savings Fund to finance the fiscal deficit for 2018-19
■ As against an earlier estimate of ~750 billion, ~1 trillion will be drawn from the NSSF to finance the fiscal deficit
deficit for 2018-19. As against an earlier estimate of ~750 billion, now ~1 trillion will be drawn from the NSSF to finance the fiscal deficit.
The government has already announced the RBI’s intention to reduce its planned buybacks of G-secs, which usually take place in second half- of G-secs by ~250 billion. Hence the gross borrowing for the year has actually been so far reduced by ~500 billion to ~5.56 trillion. Any further reduction likely to be announced on Friday will be in addition to that.
As announced earlier, net borrowing, which was budgeted at ~4.62 trillion, will see a reduction of ~250 billion on account of higher amount drawn from NSSF. Net borrowing for 2018-19 will be ~4.27 trillion.