The Indian government aims to raise ₹3.9 trillion through treasury bills during the final quarter of the ongoing financial year. It would borrow the amount in three categories of treasury bills for 13 weeks. This would include raising approximately ₹1.68 trillion in 91-day treasury bills, ₹1.28 trillion in 182-day bills, and ₹98,000 crore in 364-day bills.
Market analysts said the borrowing number was higher than they were expecting. “We expected a smaller number and even some people were even discussing the possibility of reducing the borrowing for the fourth quarter,” said a banker working in a state-run bank.
The weekly pattern for borrowing is ₹28,000 crore for seven weeks and ₹33,000 crore for six weeks. These will cater to short-term funding requirements, contributing to the total funding required for government spending.
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Market Response and Analysis as Indian Government Plans to Raise ₹3.9 Trillion Through Treasury Bills
Financial analysts have also warned that the higher-than-expected borrowing figures might have implications on market dynamics. According to Gaura Sen Gupta, Chief Economist at IDFC First Bank, non-competitive bids might imply that the total supply could be more than what the Budget estimates imply. “This will increase net supply in the final quarter,” Gupta said.
The high borrowing signifies the government’s intent to find ways to finance its higher expenditure. Analysts remain keen on the potential repercussions of the treasury bill tenders on short-term liquidity and interest rates.
Overall Strategy to Implement This Change
The strategy seems to be focused on debt financing to ensure an uncomplicated fiscal closure at year-end. Its outcome depends on the execution of policy and the nature of future demand in tenders going forward.
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