The Government of India (GoI), in consultation with the Reserve Bank of India (RBI), has decided to borrow Rs 5.03 lakh crore for the second half (H2) of FY22 i.e (October 2021 to March 2022) to fund the revenue gap for reviving the economy (which is affected by COVID-19).
i.Under the budget for 2021-22, the government’s gross borrowing for FY22 was estimated to be Rs 12.05 lakh crore along with net borrowing of Rs 9.37 crore.
ii.The Government in consultation with the RBI borrowed Rs 7.02 lakh crore for H1 FY22 by issuing bonds. Now the govt plans to borrow the remaining Rs 5.03 lakh crore.
iii.H1 borrowing was completed with a weighted average yield at 6.19 percent and weighted average maturity at 16.69 years.
Note – In FY21, there was a gross borrowing of Rs 13.71-lakh crore and net borrowing was Rs 11.03 lakh crore.
i.The borrowing of H2 FY22 will be done in 21 weekly tranches of Rs 24,000/23,000 crore per week with maturities of 2, 5, 10, 14, 30 and 40 year-securities and Floating Rate Bonds (tenor of 7-8 & 13 years).
ii.Share of borrowing under different maturities: 4 percent for 2 years; 11.9 percent for 5 years; 28.4 percent for 10 year; 17.9 percent for 14 year; 13.9 percent for 30 year; 15.1 percent for 40 year; and Floating Rate Bonds: 8.8 percent.
iii.In H1 FY22, GoI has released Rs 75,000 crore to the states and Union Territories (UTs) to compensate them for the shortfall in GST (Goods and Services Tax) revenue.
- The current borrowing will release the remaining Rs 83,000 crore out of Rs 1.58 lakh crore to states and UTs in the H2 FY22.
iv.The govt raises money from the market to fund its fiscal deficit through dated securities and treasury bills.
- Weekly borrowing under Treasury Bills in the 3rd Quarter (Q3) of FY22 is expected to be Rs 20,000 crore with net borrowing of (-) Rs 1.04 lakh crore.
- There will be the issuance of Rs 10,000 crore under 91 DTBs (Days Treasury Bills), Rs 3,000 crore under 182 DTBs; Rs 7,000 crore under 364 DTBs during the Q3 FY22.
Ways And Means Advances Limit
To handle the temporary mismatches in Government accounts, the RBI has fixed the Ways and Mean Advance (WMA) limit for H2 2022 (October 2021 to March 2022) at Rs 50,000 crore.
- RBI will initiate fresh floatation of market loans when the GoI utilises 75 percent of the WMA limit.
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About Ministry of Finance
Union Minister – Nirmala Sitharaman (Karnataka)
Minister of State (MoS) – Pankaj Chaudhary (Maharajganj, Uttar Pradesh), Bhagwat Kishanrao Karad (Constituency – Maharashtra)