“The gross borrowing is higher because of the repayment programme. My recollection on net borrowings is that we are not even touching the highest that was touched in the last five years.” -S C Garg (Economic Affairs Secretary, Government of India)
Below is the government’s borrowing plan for the next fiscal year. If this starts seeming too technical for you, advisable to skip straight to the “What does this mean for you as an investor?” section.
The Government of India announced its borrowing calendar yesterday. Last month in its budget, the government had estimated that it would need to borrow ~INR 7 Lakh Crore in the next fiscal. However, seems like the government is prepping to borrow the same quantum only within the first six months of the upcoming fiscal year.
Here’s what the borrowing plan looks like in a nutshell:
| Borrowing | Split | Mode | Maturity | Tranches |
| INR 7.02 LCr. |
INR 4.42 LCr. |
GoI – dated securities |
Varying maturity |
first six weeks – 6 tranches of |
| INR 2.6 LCr. | T-bill auction | 91d, 182d, 364d | INR 1.2 LCr. Through 91 day T-Bills |
(Source: financialexpress; GoI announcement | LCr. = Lakh Crore)
What does this mean for you as an investor?
We can expect a marginal impact as yields increase, albeit marginally. The opportunity still continues to be around debt funds with an average effective maturity below ~3 years – lower, the better. It would be best to ensure a high credit quality till there’s not further clarity around the liquidity situation in India.
Meanwhile, call it a relief rally or perhaps the build-up to a bigger story, Indian equities seem to be reflecting really strong growth in the time to come. Here’s how nifty move in the week that went by:
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Thanks,
Nirav (Head of Research)
Fisdom
