Modi government plans to borrow ₹6.77L crore in H2 FY26
What's the story
The Indian government has announced its plan to borrow ₹6.77 lakh crore in the second half of fiscal year 2025-26 (H2 FY26). The borrowing will be done through dated securities, including Sovereign Green Bonds worth ₹10,000 crore. The move is part of a broader strategy to manage the country's finances and meet its fiscal deficit target of 4.4% for the fiscal year in which the borrowing is planned.
Auction details
Breakdown of the government's borrowing plan
The government's borrowing will be completed through 22 weekly auctions until March 6, 2026. These will cover securities with maturities ranging from three to 50 years. The highest share (28.4%) will be in the form of 10-year securities. This is part of a larger plan where over three-fourths of total borrowing in H2 FY26 is expected to come from securities with over a decade-long tenure, as per Moneycontrol analysis.
Strategy overview
Greenshoe option and RBI dividend boost
The government's borrowing strategy also includes a greenshoe option to retain an additional subscription of up to ₹2,000 crore against each security mentioned in the auction notifications. Despite a revenue slip due to GST cuts announced on September 4, the government is likely to stick to its fiscal deficit target for this year. This is aided by a higher-than-expected dividend of ₹2.7 lakh crore from the Reserve Bank of India (RBI).
Q3 plan
Treasury bills and WMA limit
For the third quarter (Q3) of FY26, the government plans to borrow ₹19,000 crore through Treasury Bills over 13 weeks. This includes ₹7,000 crore under 91-day Treasury Bills (DTBs), ₹6,000 crore under 182-day DTBs, and another ₹6,000 crore under 364-day DTBs. The RBI has set a Ways and Means Advances (WMA) limit of ₹50,000 crore for H2 FY26 to manage temporary mismatches in government payments and receipts.