The Indian government has finalized its borrowing calendar for the second half of fiscal year 2025-26 (H2 FY26), announcing plans to raise ₹6.77 lakh crore through dated securities, including ₹10,000 crore via Sovereign Green Bonds (SGrBs). This decision, revealed on September 26, 2025, in consultation with the Reserve Bank of India (RBI), slightly trims the full-year gross market borrowing target to ₹14.72 lakh crore from the budgeted ₹14.82 lakh crore, signaling a commitment to fiscal prudence despite elevated spending needs in defense and infrastructure. With H1 FY26 borrowings adjusted to ₹7.95 lakh crore, this calibrated approach aims to bridge the resource gap while maintaining market stability and adhering to the 4.4% fiscal deficit target for FY26.
For investors, economists, and policymakers, this borrowing plan underscores the Centre’s balancing act between growth imperatives and deficit control, especially amid global uncertainties like potential US tariffs on Indian goods. Let’s unpack the breakdown, execution strategy, and broader economic ripple effects.
Borrowing Breakdown: Dated Securities, Green Bonds, and Treasury Bills
The H2 FY26 borrowing emphasizes long-tenure instruments to manage debt sustainability, with over three-fourths of the ₹6.77 lakh crore expected from securities maturing beyond a decade. This includes a dedicated ₹10,000 crore tranche through SGrBs to fund eco-friendly projects, aligning with India’s green transition goals.
Key elements at a glance:
| Component | Amount (₹ Crore) | Details |
|---|---|---|
| Dated Securities | 6,67,000 | Core borrowings via 22 weekly auctions till March 6, 2026; includes greenshoe option up to ₹2,000 crore per auction for flexibility. |
| Sovereign Green Bonds | 10,000 | Dedicated for sustainable initiatives; part of dated securities. |
| Treasury Bills (Q3 FY26) | 19,000 (weekly) | ₹7,000 crore (91-day), ₹6,000 crore (182-day), ₹6,000 crore (364-day) over 13 weeks; addresses short-term cash needs. |
| Ways and Means Advances (WMA) | Limit: 50,000 | RBI facility for temporary mismatches in payments/receipts during H2. |
The structure ensures a balanced debt profile, with the government retaining the right to adjust via greenshoe options based on market response. As Economic Affairs Secretary Anuradha Thakur emphasized, this pegged total reflects a “shade lower” than initial estimates, bolstered by a higher-than-expected ₹2.7 lakh crore RBI dividend.
Why the Slight Reduction? Fiscal Targets and External Pressures
The trimmed full-year target—down ₹10,000 crore from Budget estimates—stems from prudent cash management and surplus revenues, including the RBI windfall, offsetting GST revenue shortfalls from recent rate cuts. Chief Economic Adviser V. Anantha Nageswaran reaffirmed the unchanged H2 plan, expressing confidence in hitting the 4.4% fiscal deficit (down from 4.8% in FY25), which translates to a ₹15.69 lakh crore gap.
External factors like US tariff threats on Indian exports have added caution, prompting a strategy to avoid bond market disruptions. This borrowing will fund key outlays: defense (up significantly post-Budget), infrastructure via capex, and social schemes, while keeping yields in check amid global rate volatility.
Implications for Economy, Markets, and Investors
This ₹6.77 lakh crore H2 FY26 borrowing plan reinforces India’s fiscal glide path toward a 4.1% deficit by FY26-end, potentially easing borrowing costs for the private sector and supporting rupee stability. Bond markets may see moderated supply pressure, with long-dated issuances aiding pension funds and insurers.
For investors:
- Bond Yields: Expect steady 10-year G-Sec yields around 6.8-7%, with green bonds attracting ESG-focused foreign inflows.
- Equity Impact: Lower deficit signals boost sentiment for infra and capex stocks, though global trade risks linger.
- Broader Economy: Sustains 7%+ GDP growth by financing ₹11.11 lakh crore capex, creating jobs and multiplier effects.
Challenges include inflation risks from higher spending and potential FPI outflows if US rates stay elevated. Yet, experts view it as a “pro-growth” move, unlocking value without fiscal slippage.
Conclusion: A Steady Hand on Fiscal Rein
The government’s plan to borrow ₹6.77 lakh crore in H2 FY26 exemplifies disciplined financing in turbulent times, trimming targets while prioritizing green and long-term debt. As auctions kick off post-October 1, this could pave the way for sustained recovery, with eyes on Q3 T-Bill flows and WMA utilization. ET
