29-07-2025
No plan to increase Rs 14.8L cr borrowing target, says official
The government plans to stick to its gross market borrowing target of ₹14.82 lakh crore for this fiscal year to avoid any negative surprises, despite expectations of increased defence spending in the wake of
Operation Sindoor
, a senior official said.
The Centre has announced plans to borrow ₹8 lakh crore, or 54% of the full-year target, through dated securities in the fiscal first half. Net market borrowing for FY26 is budgeted at ₹11.54 lakh crore.
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"There is no plan to raise the full-year targets yet. The next review of the borrowing will take place in September when there will be more clarity," the official told ET.
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The official said there could be re-prioritisation of spending plans in certain heads, keeping in mind the overall FY26 expenditure budget of ₹50.65 lakh crore.
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However, even if expenditure rises or revenue falls from the budgetary targets, the government can tap the
National Small Savings Fund
to partly bridge the deficit. The government therefore doesn't see sovereign market borrowings, crowding out private players at a time when it is encouraging them to step up investments and do their bit for economic growth.
G-sec yield to ease
The Centre's borrowing cost will likely ease further in the coming months, underpinned by strong macroeconomic fundamentals, adequate liquidity in the system, and a broader benign interest rate outlook, the official said.
The 10-year benchmark G-sec yield has risen a tad over the past one month to 6.36% on Tuesday but it still remains about 60 basis points lower than a year before.
Already, the central bank has trimmed the repo rate by 100 basis points since February to 5.5% now, with analysts expecting another 25 basis-point cut by October. This could have a benign impact on bond yields.
Moreover, monsoon rains have been plentiful, and global crude oil prices have dropped below $70 per barrel after a brief surge in the aftermath of the Israel-Iran conflict, and will likely stay subdued for the rest of FY26. All these would augur well for the bond yield, they added.
Importantly, the
Central government
has sharply hiked the capital expenditure budget for the ministries of railways and road transport and highways in recent years. So, public entities in these sectors are not resorting to extra-budgetary resources the way they used to do in the past, reducing pressure on the market, he said.
