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The government’s market borrowing plan for the financial year 2025-26 (FY26) is well-structured to support fiscal and monetary policies, according to a report by the State Bank of India (SBI). However, the report emphasised the need to explore alternative funding sources to reduce reliance on market borrowings.
Key borrowing figures for FY26
Gross market borrowing (dated securities): Rs 14.8 lakh crore
Repayments: Rs 3.3 lakh crore
Net borrowing: Rs 11.5 lakh crore (73 per cent of the fiscal deficit)
The net borrowing is higher than the Rs 10.5 lakh crore recorded in the previous budget. Additionally, the government has planned a debt switch worth Rs 2.5 lakh crore, replacing older securities with new ones, which the report states will not impact the overall fiscal situation.
State and total borrowing outlook
Gross state borrowings: Rs 10.9 lakh crore
State repayments: Rs 3.7 lakh crore
Net state borrowings: Rs 7.2 lakh crore
Total centre + state net borrowings: Rs 18.7 lakh crore
With the inclusion of borrowing by public sector undertakings (PSUs), the total borrowing in FY26 works out at 6.1 per cent of GDP.
Projected borrowing for next five years (FY27-FY31)
SBI projected that gross market borrowing from FY27 to FY31 will range between Rs 93.8 lakh crore and Rs 95.2 lakh crore, averaging around Rs 18-19 lakh crore per year, which is higher than the current annual borrowing of Rs 15 lakh crore.
Need for alternative funding
The report highlighted the importance of diversifying borrowing sources to ensure fiscal stability. It suggested exploring alternative funding options like small savings schemes to ease the burden on market borrowings.
“The government’s fiscal trajectory over the next five years poses the challenge of expanding the borrowing base,” the report says, identifying the necessity for a well-balanced fiscal policy to aid growth while keeping the debt under control.
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