New Delhi: Government Increased Borrowing Levels Targeted In Current Budget By More Than 50% As Additional Spending And Financing Needed To Stimulate Economy Affected By COVID-19 Pandemic Increased Need For Mobilization Resource.
Consequently, the gross borrowing estimated on the market during the financial year 2020-21 will now be Rs 12 lakh crore instead of Rs 7.80 lakh crore according to the budget forecasts for the current year.
“The loan review was made necessary because of the COVID-19 pandemic,” said a statement from the finance ministry.
With the change in borrowing plan for fiscal year 21, the government also modified the indicative calendar for the issue of dated government securities for the remaining part of the first half of fiscal year 2020-21 in consultation with the Reserve Bank of India.
Thus, instead of borrowing in the first half of Rs 4.88 lakh crore according to budget estimates, RBI will conduct auctions of dated securities with a value of Rs 6 lakh crore in the rest of the first half between May 11 and September 30.
The schedule would include the issue of dated securities with maturities ranging from 4 to 40 years. There will also be variable rate bond auctions. Each auction block over a period of 5 days will be Rs 30,000 crore.
All auctions covered by the H1 calendar will have the possibility of launching a non-competitive tender under which five percent of the notified amount will be reserved for the specified retail investors.
As in the past, the Reserve Bank of India, in consultation with the Indian government, will continue to have the opportunity to make changes to the auction schedule in terms of amount notified, issue period, due dates, etc. and issue different types of instruments.
This will include instruments with non-standard maturities and Floating Rate Bonds (FRBs), including CPI-linked inflation-linked bonds, depending on Indian government requirements, changing market conditions and other relevant factors, after having duly informed the market, said the press release.
The Reserve Bank of India, in consultation with the government of India, reserves the right to exercise the green shoe option to keep an additional subscription until Rs 2000 crore each against one or more of the titles, which will be indicated in the notification auction, the statement added.