Budget 2025: Modi government may announce ₹14-15L crore market borrowings
What's the story
The Indian government is tipped to announce market borrowings of ₹14-15 lakh crore via bonds in the Union Budget 2025, leading economists have said.
Aditi Nayar, Chief Economist at ICRA, expects a gross borrowing of ₹14.8 lakh crore from the government for FY26.
Anand Rathi Group's Sujan Hajra also expects similar numbers due to repayments of maturing securities next fiscal.
Borrowing strategy
Market borrowing aligns with current fiscal year's plan
The estimated market borrowing by the government is in line with this fiscal year's borrowing plan.
In the first half of this fiscal year, the central government has borrowed nearly ₹7 lakh crore and plans to borrow another ₹6.61 lakh crore in the second half.
This plan is a major driver of interest rates in India's economy, impacting both sovereign and corporate bond issuers.
Cost reduction
Government borrowing cost expected to decrease in FY26
Experts expect the government's borrowing cost to decline in the next fiscal year owing to a possible RBI rate cut and foreign investor inflows.
HDFC Bank Economist Sakshi Gupta said bond yields are likely to edge lower in FY26 due to RBI rate cuts, adequate domestic and global demand for Indian bonds, lower inflation, debt capital inflows, and moderation in US yields.
Bond maturity
Potential announcement of bonds with higher maturity
Some experts feel that owing to the strong interest from long-term investors, the central government may announce higher maturity bonds.
Piramal Enterprises Chief Economist Debopam Chaudhuri said, "The 30-year issuance experiment has been paying off in terms of demand. This will continue."
However, others like IDFC First Bank's Gaura Sengupta don't see a change in distribution due to large state government issuances in longer tenure space.