Centre to borrow ₹8.2 trillion in FY27 first half; no impact of Iran war — yet

The Centre will borrow ₹8.2 trillion, about half of the gross borrowing requirement projected for the next financial year starting April, the finance ministry’s half yearly borrowing plan released on Friday showed.

The plan – a mild increase from the ₹8 trillion borrowed in the first half of the current fiscal year – keeps the borrowing pegged in the Union budget unchanged despite concerns about how the West Asia war could affect the Union government's finances.

The ministry said that the plan was decided in consultation with the Reserve Bank of India. The gross market borrowing for fiscal 2027 was initially estimated at ₹17.2 trillion in the budget presented in February, but subsequently, government security switches helped to lower the requirement to ₹16.09 trillion.

Auctions in the first half of FY27 are sought to be completed through 26 weekly auctions of securities ranging from three to 50 years. Of this, ten-year maturity paper accounts for 29%, the largest share, according to the borrowing plan.

The government will carry out switching or buyback of securities to smoothen the redemption profile, the ministry said.

“The government will continue to reserve the right to exercise greenshoe option to retain an additional subscription of up to ₹2,000 crore against each of the securities indicated in the auction notifications,” it said.

Weekly borrowing through issuance of treasury bills (T-Bills) in the first quarter of FY27 is expected to be ₹24,000 crore for 12 weeks with issuance of ₹12,000 crore under 91-day T-Bills, ₹6,000 crore under 182-day T-Bills, and ₹6,000 crore under 364- day T-Bills, the ministry said.

To take care of temporary mismatches in government accounts, the RBI has fixed the ways and mean advances limit for the first half of FY27 at ₹2.50 trillion, the ministry said.

Green bonds still to kick in

Of the ₹8.20 trillion, or 51% of the full year requirement, planned to be raised in the first half of FY2027, some ₹15,000 crore will be raised is targetted to be raised through sovereign green bonds.

Sovereign green bonds are issued to raise funds for public sector projects that help reduce the intensity of the economy's carbon emissions.

The Union government has issued sovereign green bonds worth ₹15,000 crore in FY26 so far against an annual target of annual target of ₹25,342 crore, as per official data. The cumulative issuance of green bonds have reached ₹72,697 crore since FY23.

Mint had earlier reported that the government is looking at ways to mobilize over ₹1 trillion in green finance to boost investments into clean energy as the 2030 deadline for 500 gigawatts of renewable capacity nears. India's total non-fossil capacity currently stands at 266.78 GW.

Bond markets are crucial for financing climate infrastructure, which requires substantial upfront capital and extended repayment horizons. Liquid and deep bond markets can provide long-term, stable, and scalable financing at predictable costs.