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NEW DELHI : The government will borrow 8.45 trillion in the first half of the current fiscal, or nearly 60% of its planned borrowing for the full year, as it looks to boost spending to revive economic growth.

The government plans to borrow a record 14.31 trillion for the current fiscal year, seeking to revitalize the economy after the pandemic.

The gross market borrowing for the current fiscal was budgeted at 14.95 trillion, but after taking into account the switch operations conducted in January, which involved buying back securities of certain maturities from the Reserve Bank of India and issuing new securities of equivalent value, the gross market borrowing for FY23 is now expected at 14.31 trillion, the finance ministry said on Thursday.

Economist Aditi Nayar said that the borrowing calendar was slightly more front-loaded than she had expected. “We had expected the government’s market borrowing calendar to target raising of 7.9 trillion gross G-sec in the first half of FY23, 55% of the adjusted budgeted total for FY23. Nevertheless, the announced amount is slightly less front-loaded than in FY22, when 62% of the total was raised," said Nayar, chief economist at rating agency ICRA Ltd.

If Indian bonds are included in the global bond indices in the second half of FY23, a new source of demand will get generated, Nayar said, adding that this would allow for a larger supply in the second half to get absorbed. “Once the borrowing calendar for FY23 kicks off, we expect the G-sec yields to start hardening, in line with the global trends, even though the repo rate may not be hiked till August 2022. We expect the 10-year G-sec yield to cross 7% over the next few weeks and rise to as much as 7.4% over the course of the first half of FY23," she added.

Borrowing in the first half of this fiscal will be done in 26 weekly tranches of 32,000-33,000 crore, spread across under 2, 5, 7, 10, 14, 30 and 40-year securities and floating rate bonds or FRBs of various tenors. “The government will continue to carry out switching of securities to smoothen redemptions," the finance ministry said, adding that the government may continue to exercise the green shoe option to retain an additional subscription of up to 2,000 crore against the securities indicated in the auction notification.

The government and the Reserve Bank of India are also working to bring out a framework for the issuance of sovereign green bonds, as announced by finance minister Nirmala Sitharaman in the budget speech on 1 February. The sale of sovereign green bonds will be announced once the preparatory work is completed, the ministry added.

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