Consequently, the government, in consultation with the Reserve Bank of India (RBI), has already conducted buybacks and switches of dated securities. In FY25, the government executed buybacks worth ₹80,000 crore and switches totaling ₹1.35 lakh crore, against ₹1.5 lakh crore worth of G-secs to be switched in the current fiscal. Together, these measures have addressed ₹2.15 lakh crore worth of COVID-related loans to date.
Sources say these steps aim to ease market pressure in FY26 by preventing a large concentration of repayments associated with COVID-related borrowing.
When asked how much more buybacks the government will conduct this fiscal, sources indicate that the government may not pursue further buybacks for now, opting instead to deploy the cash elsewhere. However, this remains to be seen.
For the current financial year, the government is not planning to reduce its market borrowing, despite the possibility that its ₹11 lakh crore capex budget may miss the target. During April-September, only 37.3% of the ₹11 lakh crore capex budget has been spent.
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