Government Plans ₹7.5 Lakh Crore Market Borrowing FY25

The Indian government has unveiled an ambitious borrowing plan, targeting Rs 7.5 lakh crore from the domestic market in the first half of the financial year 2024-25 (FY25). This figure marks a significant portion (53%) of the total borrowing target of Rs 14.13 lakh crore set for FY25. The raised funds will be used to finance government expenditure and bridge the projected fiscal deficit, which was outlined in the interim budget presented in February 2024.

To achieve this target, the government will issue dated securities. This includes a specific allocation for sovereign green bonds (SGBs) to attract environmentally conscious investors. Notably, the government introduced a new 15-year tenor security as part of this borrowing plan, offering investors more flexibility.

Breakdown of Borrowing Strategy and Repayment Plans

The Rs 7.5 lakh crore borrowing will be achieved through 26 weekly auctions. These auctions will cater to diverse investor preferences by providing a range of maturities. Investors can choose from securities with terms of 3, 5, 7, 10, 15, 30, 40, and 50 years. Additionally, the finance ministry plans to continue its “switching securities” strategy, a tactic employed to manage the redemption profile of existing government bonds effectively.

Market Borrowing Trends and Potential Economic Impact

The planned borrowing of Rs 7.5 lakh crore in H1 FY25 represents a decrease compared to the record Rs 15.43 lakh crore borrowed in the previous year. This trend suggests a potential move towards fiscal consolidation by the government. However, such a high dependence on market borrowing could have a two-fold impact:

  • Interest Rate Fluctuations: A significant influx of government bonds in the market could lead to a rise in interest rates. This, in turn, could impact borrowing costs for businesses and individuals, potentially hindering private sector credit growth.
  • Crowding Out Effect: High government borrowing might “crowd out” private sector credit. When the government is a major borrower in the market, it competes with businesses for loanable funds from banks and other financial institutions. This can make it more expensive and difficult for private companies to obtain loans, potentially slowing down economic activity.

Financial experts will be closely monitoring the government’s borrowing program and its impact on the overall health of the Indian economy. The success of this strategy will depend on effectively managing the fiscal deficit while promoting sustainable economic growth.

Additional Data Points:

  • You can mention that of the Rs 7.5 lakh crore, Rs 12,000 crore will be raised through the issuance of Sovereign Green Bonds in two tranches of Rs 6,000 crore each, with a maturity period of 10 years.
  • Include a statistic about India’s current fiscal deficit. According to reports, India’s fiscal deficit for FY24 is estimated to be around 6.4% of GDP.
  • To target environmentally conscious investors, the government aims to raise Rs 12,000 crore through the issuance of Sovereign Green Bonds (SGBs) in two tranches of Rs 6,000 crore each. These SGBs will have a maturity period of 10 years, allowing investors to support green infrastructure projects while earning returns.
  • India’s current fiscal deficit plays a role in this borrowing plan. According to reports, India’s fiscal deficit for FY24 is estimated to be around 6.4% of GDP. This significant deficit necessitates the government’s recourse to market borrowing to bridge the gap between revenue and expenditure.

Expert Opinions and Market Reactions

Financial analysts hold varying opinions on the government’s borrowing plan. Some experts view the focus on SGBs as a positive step towards mobilizing funds for environmentally sustainable projects. Others express concerns about the potential crowding out effect on private sector credit, urging the government to prioritize fiscal consolidation measures alongside market borrowing.

The announcement has generated mixed reactions within the financial markets. While some investors see the increased government bond supply as an opportunity for steady returns, others anticipate potential interest rate hikes. The ultimate impact on the market will depend on how efficiently the government manages the borrowing program and the overall economic scenario.


The Indian government’s decision to borrow Rs 7.5 lakh crore in H1 FY25 reflects its strategy to bridge the fiscal deficit and finance public spending. While this approach offers a solution in the short term, long-term economic sustainability hinges on managing the fiscal gap effectively and fostering a healthy balance between government borrowing and private sector credit growth. The success of this borrowing program will be contingent upon careful execution and close monitoring of its impact on the broader Indian economy.

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