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Informist, Saturday, Feb. 1, 2025

--BUDGET: FY26 gilt switches pegged at INR 2.5 tln 

--BUDGET: FY25 gilt switches revised to INR 1.47 tln vs INR 1.5 tln in Budget 

MUMBAI – The government aims to conduct gilt switches worth INR 2.50 trillion in the next fiscal year starting April. A switch operation entails replacing a security maturing in the near term with a longer-maturity paper, effectively postponing the government's debt repayment to a later date.

The revised estimate shows the government aims to switch gilts worth INR 1.47 trillion in 2024-25, against the Budget estimate of INR 1.50 trillion, according to the Union Budget for 2025-26 (Apr-Mar) presented by Finance Minister Nirmala Sitharaman in the Lok Sabha. The government has so far switched INR 1.47 trillion rupees of dated securities through monthly auctions in Apr-Nov. It has not announced switch auctions for December and January.

ICICI Securities Primary Dealership and Nomura both expected the government to announce gilt switches in excess of INR 2.0 trillion for FY26 to smoothen its repayments in subsequent years. Through switches and buybacks, the government has brought down its scheduled redemption in the next financial year to INR 3.96 trillion, according to Reserve Bank of India data. Some analysts also expected the RBI to switch its FY26 maturing securities with the government, which has not been announced so far. Out of the outstanding redemptions, INR 675 billion will be met through the GST compensation fund, bringing down the total redemptions to INR 3.28 trillion. 

The government's bond redemptions are set to rise sharply from 2026-27 due to repayment of debt raised during the COVID-19 pandemic. In FY27, the government repayments are set to nearly double from the current financial year to INR 7.02 trillion.  End

Reported by Aaryan Khanna and Cassandra Carvalho

Edited by Saji George Titus

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