Govt to do gross borrowing of Rs 17.2 lakh cr in FY27 to fund fiscal deficit

New Delhi, Feb 1 (PTI) The government is likely to borrow Rs 17.2 lakh crore in the next financial year to fund its fiscal deficit projected at 4.3 per cent of the GDP.

The government had estimated a gross borrowing Budget of Rs 14.80 lakh crore in FY26. The government borrows from the market to fund its fiscal deficit.

"To finance the fiscal deficit, the net market borrowings from dated securities are estimated at Rs 11.7 lakh crore. The balance financing is expected to come from small savings and other sources. The gross market borrowings are estimated at Rs 17.2 lakh crore," Finance Minister Nirmala Sitharaman said while delivering Budget 2026-27.

On a question that borrowing numbers are high, Economic Affairs Secretary Anuradha Thakur said net market borrowings are in the range of Rs 11.73 lakh crore, which is around that number for the last couple of years.

"The larger number is because we have Rs 5.5 lakh crore which have to be repaid this year. So, to that extent we don't think that it's a large number," she said.

Thakur further said, the reason for buybacks and switching is basically to reduce the government's repayment burden and to mitigate the bunching up effect and also to manage the costs.

"We did a significant switching of high coupon securities this year. Next year this Rs 5.5 lakh crore needs to be repaid. As they keep coming up, we will be making decisions," she added.

In a post Budget interaction with media, Sitharaman said the Centre is talking with states about their fiscal management and keeping a watch on their borrowings.

"The center is also under Article 293 (3) duty bound to make sure that the borrowings of the states are also monitored...we can't curb them, but beyond their FRBM. I think largely states understand their duty under the FRBM Act." In her Budget speech, the Finance Minister proposed a comprehensive review of the Foreign Exchange Management (Non-debt Instruments) Rules to create a more contemporary, user-friendly framework for foreign investments, consistent with India’s evolving economic priorities.

With regard to the Corporate Bond Market, she proposed to introduce a market making framework with suitable access to funds and derivatives on corporate bond indices.

"I also propose to introduce total return swaps on corporate bonds," she said. To encourage the issuance of municipal bonds of higher value by large cities, she said, I propose an incentive of Rs 100 crore for a single bond issuance of more than Rs 1000 crore.

The current scheme under AMRUT which incentivises issuances up to Rs 200 crore, will also continue to support smaller and medium towns. PTI DP DP DR DR