The Centre may complete about `3.54 lakh crore, or 60% of its projected gross market borrowing of `5.9 lakh crore, for 2016-17 in the first half of the year via dated securities, sources told FE.
The Centre’s total market borrowing, including `10,000 crore through sovereign gold bonds, is projected at `6 lakh crore for the next financial year, marginally higher than the revised estimate of `5.85 lakh crore for 2015-16.
Besides making room for state governments and companies to borrow more in the second half, the government usually front-loads market borrowing to meet payment obligations as tax collections remain weak in the initial months. This is a strategy keeping in mind the liquidity conditions and money market positions.
The details of the borrowing calendar for government securities will be worked out at a meeting between the finance ministry and Reserve Bank of India officials in the last week of March. Out of the total market borrowing of `5.85 lakh crore in the current fiscal, the Centre borrowed `3.51 lakh crore or about 60% in April-September.
During the current financial year, the Centre launched a new debt paper and sovereign gold bonds to wean away investors from holding physical gold. It has managed to raise just over `1,000 crore through gold bonds up to February-end as against a target of `15,000 crore. Such bonds could fetch some more money for the Centre in the ongoing third tranche between March 8 and 14, the last tranche in the current financial year.
The government is trying to contain borrowing by tapping more non-tax sources of revenue such as through auction of telecom bandwidth and minority stakes in a clutch of companies, including public sector firms as well as strategic divestment of some PSUs. The Budget has stuck to the fiscal consolidation roadmap of bringing down the Centre’s fiscal deficit to 3.5% in the next financial year from an estimated 3.9% in 2015-16.