Govt set to borrow Rs 6.77 lakh crore in H2, stay near FY26 target

The central government will borrow ₹6.77 lakh crore from the market through dated securities in the second half of this fiscal, the finance ministry said on Friday, slightly lowering the full-year borrowing target from the budgeted ₹14.82 lakh crore. It has borrowed ₹7.95 lakh crore in the first half of the financial year.

Economic affairs secretary Anuradha Thakur said the total gross market borrowing for 2025-26 has now been pegged at ₹14.72 lakh crore.

The move, experts said, would allow the government to fund its resource gap without upsetting the bond market, which has, of late, felt some pressure due to uncertainties caused by the additional US tariff on most Indian goods.

By keeping the borrowing plan predictable despite pressure to increase defence expenditure in the wake of Operation Sindoor, the government has signalled its firm commitment to fiscal discipline. It is also unlikely to crowd out state governments and private players in the debt market.

Thakur told ET that the Centre remains committed to meeting the fiscal deficit target of 4.4% of gross domestic product in 2025-26, against 4.8% a year before, while adding that “market borrowings are only one of the sources of financing of fiscal deficit”.

ET had reported on July 29 that the Centre intended to stick to its 2025-26 gross market borrowing target despite expected increase in defence spending to avoid any negative surprises for the bond market.
The Centre aims to contain its fiscal deficit at 4.4% of gross domestic product during the year, against 4.8% in the previous fiscal.
The borrowing in the second half includes ₹10,000 crore through sovereign green bonds, the ministry said in a statement.
Yield on the benchmark 10-year securities closed at 6.527% on Friday, up 3 basis points from Thursday but down 19 basis points from a year before. A basis point is a hundredth of a percentage point.

“The government will continue to carry out switching/buyback of securities to smoothen the redemption profile,” the finance ministry said in a statement. The borrowing in the second half is proposed to be over in 22 weekly tranches of ₹28,000-33,000 crore each, the ministry said.

Cut in long-tenor bond share

The share of borrowing under different maturities will be as follows: three-year maturity (6.6%), five-year (13.3%), seven-year (8.1%), 10-year (28.4%), 15-year (14.2%), 30-year (9.2%), 40-year (11.1%) and 50-year (9.2%).

The share of shorter tenure (three-five years) securities is proposed to rise to 19.9% from 15.9% a year before and that of longer-term papers (15-50 years) will drop to 43.7% from 51.8%. The share of medium-term (seven to 10-year) papers also inches up to 36.5% from 32.4%. The move is in sync with market demand for such papers.

The last tranche of the Centre’s borrowing is proposed to be over by March 6, 2026. This would help states ramp up their own market borrowing in the crucial last month of this fiscal.

The government will reserve the right to exercise the greenshoe option to retain an additional subscription of up to ₹2,000 crore against each of the securities.

Weekly borrowing through treasury bills is pegged at Rs 19,000 crore for 13 weeks for the December quarter, with issuance of under 91-day papers worth ₹7,000 crore, 182-day ones worth ₹6,000 crore and another ₹6,000 crore through 364-day securities.

To meet temporary mismatches in the government accounts, the Reserve Bank of India has fixed the ways and means advances limit for the second half at ₹50,000 crore.