What is the significance of including Sovereign Green Bonds (SGrBs) in the government's borrowing plan for H2 FY 2025-26?

The inclusion of SGrBs signifies India's commitment to sustainable finance and climate action. It helps mobilize funds for green projects, diversifies the investor base towards ESG-conscious investors, and enhances the country's green credentials globally. This aligns with India's climate goals and international commitments, attracting responsible investments.

How does the government's market borrowing strategy, including the spread across various maturities, contribute to effective public debt management?

Spreading market borrowing across diverse maturities (3 to 50 years) helps in diversifying the redemption profile, preventing large repayment obligations in a single year. This strategy reduces refinancing risk, provides flexibility in debt management, and ensures a stable borrowing cost over the long term, crucial for maintaining fiscal stability and market confidence.

Explain the role of Ways and Means Advances (WMA) in the context of the government's financial management, as indicated in the borrowing plan.

Ways and Means Advances (WMA) are temporary loan facilities provided by the RBI to the government to bridge short-term mismatches between receipts and payments. The ₹50,000 crore limit for H2 FY 2025-26 ensures smooth government operations, preventing liquidity crunches without resorting to permanent borrowing, thus maintaining fiscal discipline and efficient treasury management.

What is the purpose of employing tools like switching/buyback of securities and the greenshoe option in the government's borrowing programme?

Switching/buyback helps smoothen the debt redemption profile by exchanging or repurchasing existing securities, reducing future repayment pressures. The greenshoe option allows retaining additional subscription up to ₹2,000 crore per security, providing flexibility to raise more funds if demand is high, optimizing borrowing costs and managing market liquidity effectively.

Why is the consultation with the Reserve Bank of India crucial for finalizing the government's borrowing programme?

Consultation with the RBI is crucial as it acts as the government's debt manager. RBI's expertise ensures the borrowing programme is aligned with monetary policy objectives, market conditions, and liquidity management. This collaboration helps determine optimal borrowing amounts, maturities, and timing, minimizing market disruption and ensuring successful debt issuance.

Government’s Borrowing plan for the second...

India’s Finance Ministry has outlined a ₹6.77 lakh‑crore borrowing programme for H2 FY 2025‑26, detailing a diversified maturity mix, issuance of sovereign green bonds and a ₹50,000 crore RBI Ways and Means Advances limit. The scale and structure of this programme are pivotal for UPSC aspirants to understand fiscal deficit financing, public debt management and green financing trends.

Ministry of Finance Government’s Borrowing plan for the second half of FY 2025-26 The Government of India, in consultation with the Reserve Bank of India, has finalized its borrowing programme for the second half (H2) of FY 2025-26. Government of India plans to borrow ₹₹6.77 lakh crore in the second half of the fiscal year 2025-26 (H2: FY 2025-26) through dated securities, including ₹10,000 crore through issuance of Sovereign Green Bonds (SGrBs). The Gross Market Borrowing of ₹6.77 lakh crore shall be completed through 22 weekly auctions till March 6, 2026. The market borrowing will be spread over 3, 5, 7, 10, 15, 30, 40 and 50 year securities. The share of borrowing (including SGrBs) under different maturities will be: 3-year (6.6%), 5-year (13.3%), 7-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 Government will continue to carry out switching/buyback of securities to smoothen the redemption profile. The Government will continue to reserve the right to exercise greenshoe option to retain an additional subscription of up to ₹2,000 crore against each of the securities indicated in the auction notifications. Weekly borrowing through issuance of Treasury Bills in the third quarter (Q3) of FY 2025-26 is expected to be ₹19,000 crore for 13 weeks with issuance of ₹7,000 crore under 91 DTBs, ₹6,000 crore under 182 DTBs and ₹6,000 crore under 364 DTBs, respectively. To take care of temporary mismatches in Government payments and receipts, , the Reserve Bank of India has fixed the Ways and Mean Advances (WMA) limit for H2 of FY 2025-26 at ₹50,000 crore. More details may be seen in the detailed Press Release available on the Websites of Finance Ministry and the Reserve Bank of India. **** NB/KMN (Release ID: 2171787)

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Government’s Borrowing plan for the second half of FY 2025-26

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