The government will borrow Rs 2.88 lakh crore in the April-September period of 2018-19, lower than Rs 3.72 lakh crore it had borrowed in the first half of the current fiscal, and introduce bonds linked to CPI or retail inflation.
Economic Affairs Secretary Subhash Chandra Garg said that, in consultation with the Reserve Bank, it has also decided to issue Government Securities (G-Sec) with 1-4 year maturity as demanded by primary dealers.
At a meeting with finance ministry officials last week, the dealers had suggested that the government out with shorter duration bonds as the likely change in interest rate by the RBI could have a bearing on long duration bonds.
The borrowing calendar for the first half of the 2018-19 fiscal was finalised at a meeting between finance ministry and RBI officials on Saturday.
Briefing reporters about the programme, Garg said Rs 2.88 lakh crore gross borrowing in the April-September period of next fiscal, is 47.56% of the budgeted amount.
The government in the Budget has raised the gross borrowing to Rs 6.06 lakh crore, from Rs 5.99 lakh crore in current fiscal ending March 31.
"We are absolutely confident that we will be able to meet all expenditure without going into overdraft," he said.
The 47.56% of budgeted gross market borrowing in the first half of next fiscal is lower than the average of 60-65% in last five years.
The government borrows funds from money market to bridge the fiscal deficit. The deficit has been pegged at 3.3% of GDP in 2018-19, lower than 3.5% in current fiscal.
In the next fiscal, the G-Sec buyback would be reduced by Rs 25,000 crore. In addition to this, the government will withdraw up to Rs 1 lakh crore from the National Small Savings Fund (NSSF) -- Rs 25,000 crore more than in the current financial year -- to fund the fiscal deficit.
This could reduce the overall market borrowing programme of the government for the entire fiscal, Garg said.
To a question on whether the gross borrowing in next fiscal would be lower by Rs 50,000 crore, he said: "You can conclude that."
Garg said the government plans to issue more Floating Rate Bonds (FRBs).
This, along with Consumer Price Index (CPI)-linked Inflation Indexed Bonds, would account for 10% of the total issuances during the year.
He also said that the government and the RBI are in the final stage of discussions for increasing FPI limits from April 1, 2018.
He said more issuance will be planned in short and long-term maturity bucket, reducing the issuance in medium term segments of 10-14 years to around 29%, as against more than 50% issuances in previous years.
Besides, the gross borrowing per week under T-Bills will be Rs 15,000 crore.
Asked as to when will RBI transfer additional dividend to the government, Garg said "Now there is 2-3 days left. So this would be coming."
In August, RBI had paid a dividend of Rs 30,659 crore for the fiscal ended June 2017. It was less than half the Rs 65,876 crore it had paid in 2015-16.
Since November last year the finance ministry has been in discussions with the central bank to transfer the surplus to the exchequer.To a query on why RBI and the government are on a different page with regard to dividend payment, Garg said: "We are on one page". However, he did not give an indication on the quantum of additional dividend the government is expecting from the Reserve Bank.