In order to ease the pressure on the local bond markets, the Central government will borrow Rs 2.88 lakh crore in the April-September period of 2018-19 (H1FY19), which is lesser than Rs 3.72 lakh crore it had borrowed during the same period of FY18. The borrowing for the first half of 2018-19 works out to 47.56 percent of budgeted gross market borrowing which is much lower than the average of 60-65 percent in the last five years.
Department of Economic Affairs (DEA) Secretary Subhash Chandra Garg has said that the government will also come out with inflation indexed bonds linked to consumer price index (CPI) inflation. He also informed that the government will introduce a new bucket of bonds with duration of one to four years, indicating its willingness to borrow more through short-term securities. Besides, he noted that the budgeted gross borrowing through G-Secs for fiscal 2018-19 was Rs 6.05 lakh crore which would be used to fund the fiscal deficit of 3.3 percent of GDP. He added that they are absolutely confident that they will be able to meet all expenditures without going into over draft.
Subhash Chandra Garg further said that the government also plans to reduce the G-Sec buyback by Rs 25,000 crore in the next fiscal. In addition to this, he said that the government will withdraw up to Rs 1 lakh crore from the National Small Savings Fund (NSSF) -- Rs 25,000 crore more than in the current financial year -- to fund the fiscal deficit. He added that this could reduce the overall market borrowing programme of the government for the entire fiscal.