MM TAX CLUB

The Government of India, in consultation with the Reserve Bank of India, has finalized its borrowing programme for the first half (H1) of FY 2024-25.

Out of Gross Market borrowing of ₹14.13 lakh crore projected for FY 2024-25 in the Union budget, ₹7.50 lakh crore (53.08%) is planned to be borrowed in the first half (H1) through dated securities, including ₹12,000 crore through issuance of Sovereign Green Bonds (SGrBs). Based on market feedback and in line with global market practices, it has been decided to introduce a new dated security of 15-year tenor.

The gross market borrowing of ₹7.50 lakh crore shall be completed through 26 weekly auctions. The market borrowing will be spread over 3, 5, 7, 10, 15, 30, 40 and 50 year securities. The share of borrowing (including SGrBs) under different maturities will be: 3-year (4.80%), 5-year (9.60%), 7-year (8.80%), 10-year (25.60%), 15-year (13.87%), 30-year (8.93%), 40-year (19.47%) and 50-year (8.93%).

The Government will continue to carry out switching of securities to smoothen the redemption profile.

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.

Weekly borrowing through issuance of Treasury Bills in the first quarter (Q1) of FY 2024-25 is expected to be ₹27,000 crore for the first seven auctions and ₹22,000 crore for the subsequent six auctions with net borrowing of ₹(-)3,000 crore during the quarter. There will be weekly issuance of ₹12,000 crore under 91 DTBs, ₹7,000 crore under 182 DTBs and ₹8,000 crore under 364 DTBs in the first seven auctions and weekly issuance of ₹10,000 crore under 91 DTBs, ₹5,000 crore under 182 DTBs and ₹7,000 crore under 364 DTBs in subsequent six auctions to be conducted during the quarter.

To take care of temporary mismatches in Government accounts, the Reserve Bank of India has fixed the Ways and Mean Advances (WMA) limit for H1 of FY 2024-25 at ₹1.50 lakh crore.

More details may be seen in the detailed Press Release available on the Websites of Press Information Bureau, the Minister of Finance, and the Reserve Bank of India.

The Monthly Account of the Union Government of India upto the month of February, 2024 has been consolidated and reports published. The highlights are given below:-

The Government of India has received ₹22,45,922 crore (81.5% of corresponding RE 2023-24 of Total Receipts) upto February, 2024 comprising ₹18,49,452 crore Tax Revenue (Net to Centre), ₹3,60,330 crore of Non-Tax Revenue and ₹36,140 crore of Non-Debt Capital Receipts. Non-Debt Capital Receipts consists of Recovery of Loans ₹23,480 crore and Miscellaneous Capital Receipts of ₹12,660 crore. ₹10,33,433 crore has been transferred to State Governments as Devolution of Share of Taxes by Government of India upto this period which is ₹2,25,345 crore higher than the previous year.

Total Expenditure incurred by Government of India is ₹37,47,287 crore (83.4% of corresponding RE 2023-24), out of which ₹29,41,674 crore is on Revenue Account and ₹8,05,613 crore is on Capital Account. Out of the Total Revenue Expenditure, ₹8,80,788 crore is on account of Interest Payments and ₹3,60,997 crore is on account of Major Subsidies. 

The rate of interest on Government of India Floating Rate Bond 2033 (GOI FRB 2033) applicable for the half year March 22, 2024 to September 21, 2024 shall be 8.34 percent per annum.

It may be recalled that FRB 2033 carries a coupon, which has a base rate equivalent to the average of the Weighted Average Yield (WAY) of last three auctions (from the rate fixing day, i.e., March 22, 2024) of 182 Day T-Bills, plus a fixed spread (1.22 percent).