Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

India's FY24 gross borrowing could be less than expected -economists

Stock Markets Jan 25, 2023 04:41AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

MUMBAI (Reuters) - India's central government's gross market borrowings for 2023/24 could come in below market expectations as a pool of securities raised to compensate states for a shortfall in goods and services tax may not be rolled over, a few economists said.

However, there are chances of the central bank paying the government a higher dividend, which could allow for a surprise at the budget presentation on Feb. 1.

The government's gross borrowing is expected to be a record 16 trillion rupees (about $196 billion) for the fiscal year through March 2024, according to a Reuters poll of economists.

ICICI Securities Primary Dealership expects net government borrowings of 12.5 trillion rupees for the next financial year. In addition, bonds worth 4 trillion rupees are set to come up for redemptions in that year.

Typically, these redemptions would be added to the net borrowings to arrive at the expected gross borrowings. However, this year, some of these maturities are of bonds issued to give states GST compensation, economists Prasanna A and Abhishek Upadhyay said in a note.

"Around 760 billion rupees of GST compensation bonds are due for maturity in FY24. Once we knock these off, the 'true' gross borrowing comes to 15.8 trillion rupees," the economists estimated.

India borrowed 1.1 trillion rupees and 1.59 trillion rupees in 2020-21 and 2021-22, respectively, to lend to states and compensate for a revenue shortfall from tax collections.

After adjusting for the redemption of such bonds in 2022-23, IDFC First Bank (NASDAQ:FRBA) expects gross borrowing of 15.50 trillion rupees.

This financial year, the government has switched bonds worth 1 trillion rupees with the market and the Reserve Bank of India (RBI) by replacing bonds coming up for maturity in the next few years with longer-dated securities.

"The gross G-sec issuance can be reduced further by using a combination of switches with the market and RBI," which could lower gross borrowing to 15.1 trillion rupees, IDFC First Bank economist Gaura Sen Gupta said in a note.

Then there is also the potential for a surprise on the RBI's dividend payment to the government next financial year.

The RBI, which will declare a dividend after March 31, would likely have booked higher profits due to large dollar sales.

Since 2018/19, the RBI benchmarks dollar sales against its historical cost of buying dollars, which IDFC First Bank estimates at 62.3.

"The RBI dividend is likely to get support from higher dollar sales, with gross sales tracking at $180 billion for April-November, versus $97 billion in FY22," said Sen Gupta.

This, according to Madhavi Arora, economist at Emkay Global Financial Services, could allow the RBI to transfer a dividend of close to 1 trillion rupees to the government, boosting its income and allowing it to keep its borrowing in check. ($1 = 81.6350 Indian rupees)

India's FY24 gross borrowing could be less than expected -economists

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email