The Government of India has successfully completed its first auction of dated securities in H2FY27, raising ₹33,000 crore through the sale of four different securities. The auction, conducted on October 1, 2026, saw the sale of 6.20% GS 2029 for ₹9,000 crore, 6.57% GS 2033 for ₹12,000 crore, 7.63% GS 2056 for ₹9,000 crore, and 7.50% GOI SGrB 2056 for ₹3,000 crore. The auction was conducted using the multiple price method, with both competitive and non-competitive bids submitted electronically on the Reserve Bank of India Core Banking Solution (e-Kuber system). The government retained the option to retain additional subscription up to ₹2,000 crore against each security.
The Centre is planning to mobilise ₹7.86 trillion through dated securities including Sovereign Green Bonds of ₹15,000 crore during the October-March period of 2026-27, according to the finance ministry statement released on September 25. This comprehensive borrowing strategy forms part of the government's broader fiscal management approach for the second half of the current financial year. The full-year market borrowing plan of nearly ₹16 lakh crore is about ₹1.20 lakh crore below the ₹17.20 lakh crore projected in the FY27 Budget Estimates, as reported by the finance ministry. The lower borrowing programme is in line with the government's broader fiscal consolidation path, with the fiscal deficit for FY27 targeted at 4.3 percent of GDP. A senior finance ministry official confirmed that the reduction is mainly due to switching G-secs maturing in 2026-27 of ₹1,14,286 crore, representing a conscious debt-management strategy of the government.
Market traders expect the Reserve Bank of India (RBI) to tilt the government's borrowing programme toward short-tenure securities in the second half of FY27, as reported by The Economic Times. The RBI announced a ₹1 lakh crore open market operation (OMO) auction for the last two weeks of September, though this may not be sufficient to absorb the banking system's excess liquidity. Short-term bonds should make up 35% of total borrowing, up from 28% in the corresponding period last year and 31% in the first half of this fiscal year. The daily average surplus in September so far is ₹10.25 lakh crore, significantly higher than ₹3.67 lakh crore in August and ₹1.07 lakh crore in July. The strong appetite for short-term bonds comes as banks have seen a surge in liquidity following massive inflows of $136.4 billion under the FCNR(B) scheme, prompting the RBI to reassess liquidity absorption measures.
Finance Minister Nirmala Sitharaman had proposed to borrow ₹17.2 trillion to fund the fiscal deficit projected at 4.3 per cent of GDP in the Budget. In absolute terms, the fiscal deficit is pegged at ₹16.9 trillion for 2026-27, as reported by the finance ministry. The government's borrowing requirements reflect the scale of expenditure commitments and development initiatives planned for the remainder of the financial year. The Budget has also set out a debt consolidation strategy aimed at putting the Central Government's debt on a declining path. During the first half ending this month, the government would mobilise ₹8.13 lakh crore from bonds, slightly lower than the target of ₹8.2 lakh crore, to fund the revenue gap.
The borrowing plan includes a specific allocation of ₹15,000 crore for Sovereign Green Bonds, demonstrating the government's commitment to sustainable financing. This allocation represents a significant portion of the total planned borrowing and aligns with the government's environmental and climate finance objectives. The inclusion of green bonds in the borrowing strategy signals the government's focus on sustainable development financing.
The gross market borrowing of ₹7.86 lakh crore in H2FY27 will be conducted through 23 weekly auctions, with the borrowing spread across securities with maturities of 3, 5, 7, 10, 15, 30, 40 and 50 years. The 10-year segment will account for the largest share at 26.3 percent, followed by 15-year securities at 17.6 percent. The share of 3-year securities will be 6.9 percent, while 5-year securities will account for 12.1 percent. The government will raise 9.1 percent through 7-year securities, 9.2 percent through 30-year securities, 8.9 percent through 40-year securities and 9.9 percent through 50-year securities. The central government will continue to undertake switching and buyback operations to smoothen the redemption profile of its outstanding securities.
During the third quarter of FY27, the central government expects to borrow ₹23,000 crore per week through Treasury Bills across 13 auction weeks. This will comprise ₹8,000 crore each through 91-day and 182-day T-Bills and ₹7,000 crore through 364-day T-Bills. To address any temporary mismatches in government accounts, the Reserve Bank of India (RBI) has fixed the Ways and Means Advances (WMA) limit for H2FY27 at ₹50,000 crore. The borrowing programme has been finalised by the central government in consultation with the RBI.
