Intro:
RBI Governor Sanjay Malhotra said lower net government borrowing will help raise funds efficiently and support economic stability.
Mumbai
Reserve Bank of India Governor Sanjay Malhotra said on Friday that the central government’s borrowing programme for the coming financial year is on the lower side, which should allow it to mobilise resources at reasonable prices without putting undue pressure on financial markets. His remarks came during the post-monetary policy press conference, where he sought to reassure investors about debt sustainability and liquidity conditions.
Malhotra stressed that market participants should focus more on the government’s net borrowing requirement rather than headline gross borrowing figures. It may not be right to look at the gross borrowing number alone, he said, explaining that higher redemptions expected in FY27 would naturally push up gross borrowing. Net borrowings, however, are only at Rs 11.73 lakh crore, which is about Rs 20,000 crore more than last year. Given the size of the Budget, one would have expected a much bigger increase, he observed.
According to the governor, the relatively modest rise in net borrowings reflects fiscal discipline and should help keep bond yields in check. He added that the government plans to supplement its borrowing programme through the issuance of Treasury Bills, which would provide authorities with greater flexibility in managing cash flows and smoothing the yield curve.
The issuance of Treasury Bills in the next financial year will help further manage the yield curve better, Malhotra said. He also noted that the budgeted numbers for small savings schemes appear conservative, reinforcing the view that the Centre’s overall borrowing burden remains manageable. The Centre’s borrowing programme is on the lower side and can raise funds at reasonable prices, he added.
