At Rs 5.03 lakh crore, the Centre’s second semester loan is in line with budget estimates


The government will borrow Rs 5.03 lakh crore in the second half of the current fiscal year, according to the estimate presented in the fiscal year budget, a move that experts say will slow yields.

“The government now plans to borrow the balance of Rs 5.03 lakh crore in the second half (S2) of fiscal year 2021-22. The H2 FY2021-22 projection also takes into account the release requirements of the amount of the loan. balance to the States because of a loan facility instead of compensation for the tax on goods and services during the year, “said Monday a statement from the Ministry of Finance.

The government had set its gross borrowing target for fiscal year 22 at Rs 12.5 lakh crore in the 2021-22 Union budget, presented by Finance Minister Nirmala Sitharaman earlier in February.

On gross market borrowings, it was planned to borrow 7.24 lakh crore or 60% in the first half of the year. The effective borrowing in the first half of fiscal year 2021-22 was Rs 7.02 lakh crore.

“GoI’s borrowing schedule in the second half of fiscal 2022 came as a positive surprise, as although the amount was on budget, it absorbed the GST-backed offset loan to be provided to states,” he said. said Aditi Nayar, chief economist. ICRA.

“A credible figure given the fiscal trajectory so far. In fact, if some of the more uncertain divestments materialize, the figure could be lower than market expectations and could keep returns under control,” said Abheek Barua , Chief Economist, HDFC Bank.

The Rs 5.03 lakh crore loan is expected to be made in 21 weekly installments of Rs 24,000 to 23,000 crore, a finance ministry statement said on Monday.

The centre’s total back-to-back borrowing from the GST for FY22 is set at Rs 1.59 lakh crore, of which Rs 75,000 crore was released in July, on its own. cash balances. The second half loan will include a balance of Rs 84,000 crore, indicating that the entire loan had been managed within budgeted target without putting additional pressure on the markets to borrow in the name. states for the GST.

Nayar said the borrowing implied that the government’s budget deficit would be around Rs 1.6 lakh crore lower than the budget despite the modest increase in spending, a clear confirmation that the revenue recovery was underway. It also indicates that the government expects the divestment proceeds of Rs 1.75 lakh crore to materialize. Based on the borrowing schedule, G-sec yields are expected to open a spread of at least 10 basis points, Nayar added.

Given the better than expected financial situation, Barua called for more support for the economy. “It is possible to offer another round of fiscal stimulus and it is not necessary to show a lower budget deficit at this stage, as many sectors of the economy still need support,” a- he added. Barua said the government’s budget deficit could be in the range of 6 to 6.4 percent of GDP compared to 6.8 percent of budgeted GDP for fiscal year 22.

Loan management

The finance ministry said borrowing from the former went smoothly, with a weighted average yield of 6.19% and a weighted average maturity of 16.69 years.

The second semester loan, he said, will be spread over 2, 5, 10, 14, 30 and 40 year bonds and variable rate bonds with a maturity of 7-8 and 13 years.

The government will continue to convert securities to smooth repayments in the coming years, the statement said. To remedy the temporary mismatches in the government account, the Reserve Bank set the Ways and Mean Advance limit for H2 at Rs 50,000 crore, he said.


Comments are closed.