How does the government borrowing program for the coming year look like in FY23?

With the new fiscal year starting off, the full year borrowing program is already out. The total borrowings for FY23 are higher than for FY22 and that indicates that the fiscal deficit is likely to remain at elevated levels through the current year also. For the first half of FY23 ending September 2022, the Central government will borrow Rs 8.45 trillion in the first half of FY23, representing nearly 60% of the annual borrowing target of Rs.14.31 trillion.

In a way, this is a way of front-loading the borrowing program so that the government has the leeway to adjust the borrowing program appropriately if required in the second half. Normally, the borrowing program is front ended in order to give a major thrust to the capital expenditure programs of the government. Such programs normally have the potential to generate a multiplier effect on the economy and boost GDP growth.

However, it must be noted that the full year borrowing target for FY23 is higher than in FY22. For instance, the full year borrowing target for FY22 stood at Rs.12.05 trillion, so the current year borrowing target is a full 18.8% higher than the previous fiscal year. The borrowing will be spread across a range of tenors. The tenors will include 2, 5, 7, 10, 14, 30 and 40 year securities, apart from the issue of floating rate bonds or FRBs.