Government Borrowing Plan for H2 FY 2026-27: Rs 7.86 Lakh Crore via Dated Securities

The Ministry of Finance on 25 September 2026 announced the Government of India's borrowing plan for the second half of FY 2026-27, drawn up in consultation with the Reserve Bank of India. The government will raise Rs 7,86,000 crore through dated securities in 23 weekly auctions between October 2026 and March 2027. Gross borrowing through dated securities for the full year is now expected at Rs 15,99,506 crore, below the budget estimate of Rs 17,20,000 crore. An indicative issuance calendar and a Treasury Bill auction calendar for the October to December quarter were released alongside.

What Happened

The Ministry of Finance released the Government of India's market borrowing programme for the second half of FY 2026-27 on 25 September 2026. The plan, settled in consultation with the Reserve Bank of India, provides for Rs 7,86,000 crore to be raised through dated securities between October 2026 and March 2027. An indicative issuance calendar for dated securities and a separate auction calendar for Treasury Bills for the October to December quarter were issued the same day.

When & Where

The announcement was made on 25 September 2026, a few days before the start of the second half of the financial year on 1 October 2026. The borrowing period runs from 1 October 2026 to 31 March 2027. The auctions are conducted by the Reserve Bank of India, whose debt management operations are run from Mumbai, while the policy decision rests with the Ministry of Finance in New Delhi.

Who Is Involved

Ministry of Finance — decides the borrowing quantum and issues the calendar.
Department of Economic Affairs — the department within the ministry that handles budget and market borrowing policy.
Reserve Bank of India — acts as the government's debt manager and conducts the auctions.
Primary Dealers — market intermediaries obliged to bid in every auction and to underwrite issues.
Banks, insurers and pension funds — the main institutional buyers of government securities.
Retail investors — eligible through the non-competitive bidding facility, which reserves 5 percent of each issue.

How It Works

The budget fixes the fiscal deficit, and the gap between receipts and expenditure is financed mainly by issuing dated securities, so the borrowing calendar follows from the budget arithmetic.
The total is split between the first and second half of the year, and the second-half figure is announced around September so that the market can plan.
The amount is spread across 23 weekly auctions and eight maturity buckets, which prevents a large supply shock in any single week or tenor.
Longer tenors of 30, 40 and 50 years are used to lengthen the average maturity of debt, which reduces the risk of having to refinance a large amount in any one year.
A greenshoe option of up to Rs 2,000 crore per security lets the government retain extra subscription when demand is strong, without announcing a fresh issue.
Switch and buyback auctions held on the third Monday of each month allow the government to exchange near-maturity bonds for longer ones, smoothing the repayment profile.
Ways and Means Advances from the Reserve Bank, capped at Rs 50,000 crore for this half year, cover short-term mismatches between receipts and payments and are not a source of deficit financing.

Why It Matters

Fiscal angle: the full-year expectation of Rs 15,99,506 crore is below the budget estimate of Rs 17,20,000 crore, which signals a smaller call on the market than budgeted.
Monetary angle: the size and tenor mix of government borrowing influence bond yields, which in turn affect lending rates across the economy.
Banking angle: government securities are the main instrument through which banks meet the statutory liquidity ratio, so the supply calendar matters for bank balance sheets.
Environmental angle: the inclusion of 30-year Sovereign Green Bonds ties debt issuance to climate-related public spending.

Historical Background

India's market borrowing framework took its modern shape after the 1990s reforms, when auction-based issuance replaced administered interest rates on government debt. The practice of automatic monetisation through ad hoc Treasury Bills was ended in the 1990s and replaced by the Ways and Means Advances arrangement, which places a ceiling on short-term central bank accommodation. The Fiscal Responsibility and Budget Management Act, 2003 set the statutory framework for limiting deficits and for reporting borrowing to Parliament. The Government Securities Act, 2006 replaced the older Public Debt Act, 1944 and modernised the legal basis for issuing and transferring government securities. India issued its first Sovereign Green Bonds in January 2023, adding a climate instrument to the regular calendar.

Previous Related Events

In January 2023 India issued its first tranche of Sovereign Green Bonds, creating the instrument that now appears in the H2 FY 2026-27 calendar.
The Reserve Bank launched the Retail Direct scheme in 2021, allowing individual investors to open gilt accounts and buy government securities directly.
The practice of publishing a half-yearly indicative issuance calendar has been followed for years, and the H2 FY 2026-27 calendar continues that pattern.

Static GK Connection

Dated securities: long-term government bonds carrying a fixed or floating coupon, with maturities of more than one year, issued by the Reserve Bank on behalf of the government.
Treasury Bills: short-term instruments issued at a discount to face value and redeemed at par, in maturities of 91, 182 and 364 days. They carry no coupon.
Ways and Means Advances: temporary advances from the Reserve Bank to the government to bridge timing mismatches in cash flow, subject to a pre-announced ceiling.
Statutory Liquidity Ratio: the share of a bank's net demand and time liabilities that must be held in approved assets, largely government securities.
Greenshoe option: a provision allowing the issuer to accept subscription above the notified amount, used here up to Rs 2,000 crore per security.

India & World Comparison

India's borrowing calendar is notable for how far out it extends. The inclusion of 40-year and 50-year tenors puts India among the smaller group of sovereigns issuing at such long maturities, a practice also followed by several European governments and Japan. Most large sovereign issuers publish indicative calendars in the same way, since predictability lowers the yield investors demand. India's market is still dominated by domestic institutional buyers, whereas foreign holdings form a much larger share of government debt in many advanced economies. No verified current global ranking of sovereign borrowing programmes exists, so the comparison is best made in terms of instruments and tenor structure rather than position.

Future Impact

The actual borrowing against the Rs 7,86,000 crore plan will be tracked auction by auction until 31 March 2027.
The Treasury Bill calendar for the January to March 2027 quarter will be issued separately later in the year.
Bond yields in the October 2026 to March 2027 window will respond to the tenor mix, particularly the 26.3 percent concentration in the 10-year bucket.
Sovereign Green Bond issuance at the 30-year tenor will shape the pricing benchmark for future green debt.

🔑 Key Points for Revision

The H2 FY 2026-27 borrowing plan was announced on 25 September 2026 by the Ministry of Finance.
Rs 7,86,000 crore will be raised through dated securities in the second half of FY 2026-27.
The plan was finalised in consultation with the Reserve Bank of India.
Full-year gross borrowing through dated securities is now expected at Rs 15,99,506 crore.
The budget estimate for FY 2026-27 was Rs 17,20,000 crore.
The H2 amount will be raised in 23 weekly auctions across eight maturity buckets.
The 10-year bucket takes the largest share at 26.3 percent.
The 15-year bucket takes 17.6 percent, the second largest share.
The 3-year bucket takes the smallest share at 6.9 percent.
Sovereign Green Bonds of 30-year maturity are part of the calendar.
A greenshoe option of up to Rs 2,000 crore per security applies.
Five percent of each issue is reserved for retail investors under non-competitive bidding.
Switch and buyback auctions are held on the third Monday of each month.
Treasury Bills worth Rs 23,000 crore will be auctioned weekly in the October to December 2026 quarter.
The Ways and Means Advances limit for H2 FY 2026-27 is Rs 50,000 crore.

🧠 Concept Link (Static GK Deep Dive)

Core Concept: Government Market Borrowing and Public Debt Management

Definition: market borrowing is the raising of funds by the government from the financial market through the issue of dated securities and Treasury Bills.
Constitutional / Legal Basis: the Government Securities Act, 2006 governs the issue and transfer of government securities; the Fiscal Responsibility and Budget Management Act, 2003 sets the fiscal discipline framework.
Scientific / Economic Principle: the underlying idea is deficit financing, where a government bridges the gap between revenue and expenditure by borrowing against future revenue rather than by printing money.
Link to this event: the H2 FY 2026-27 plan of Rs 7,86,000 crore is exactly such a borrowing programme, spread across 23 weekly auctions.
Origin & History: auction-based issuance of government debt was introduced as part of the financial sector reforms of the 1990s.
Key milestone 1: the Fiscal Responsibility and Budget Management Act was enacted in 2003 to place statutory limits on deficits.
Key milestone 2: the Government Securities Act, 2006 replaced the Public Debt Act, 1944.
Related Acts / Schemes / Treaties: the Reserve Bank of India Act, 1934; the Retail Direct scheme launched in 2021; the Sovereign Green Bond framework.
Nodal Ministry / Body: the Department of Economic Affairs in the Ministry of Finance decides policy; the Reserve Bank of India executes the auctions as debt manager.
India-specific relevance: government securities anchor the statutory liquidity ratio, the insurance and pension portfolios, and the benchmark yield curve in India.
Global comparison: most large sovereigns publish indicative calendars; India's distinctive feature is the depth of its very long tenor issuance at 40 and 50 years.
Data point: the 10-year maturity bucket accounts for 26.3 percent of the H2 FY 2026-27 issuance.
Common exam angle: examiners ask which body conducts the auctions, the maturities of Treasury Bills, and the difference between Ways and Means Advances and market borrowing.
Easy memory hook: "91, 182, 364 for bills; more than a year for bonds."

❓ Practice MCQs

Q1. How much will the Government of India borrow through dated securities in the second half of FY 2026-27? [Easy]

A) Rs 5,60,000 crore

B) Rs 11,20,000 crore

C) Rs 7,86,000 crore

D) Rs 15,99,506 crore

Answer: C

Explanation: Rs 7,86,000 crore is the H2 figure; Rs 15,99,506 crore is the expected full-year borrowing.

Q2. Which institution conducts the auctions of government dated securities in India? [Easy]

A) The Securities and Exchange Board of India

B) The Reserve Bank of India

C) The National Stock Exchange

D) The Department of Financial Services

Answer: B

Explanation: The Reserve Bank of India acts as debt manager to the government and conducts the auctions.

Q3. Which maturity bucket carries the largest share of the H2 FY 2026-27 dated securities issuance? [Moderate]

A) 5-year

B) 10-year

C) 15-year

D) 30-year

Answer: B

Explanation: The 10-year bucket accounts for 26.3 percent, ahead of the 15-year bucket at 17.6 percent.

Q4. What is the Ways and Means Advances limit fixed for the second half of FY 2026-27? [Moderate]

A) Rs 20,000 crore

B) Rs 35,000 crore

C) Rs 50,000 crore

D) Rs 75,000 crore

Answer: C

Explanation: The limit was fixed at Rs 50,000 crore to cover temporary cash flow mismatches.

Q5. In how many weekly auctions will the H2 FY 2026-27 dated securities borrowing be completed? [Moderate]

A) 13

B) 18

C) 23

D) 26

Answer: C

Explanation: The Rs 7,86,000 crore will be raised through 23 weekly auctions across eight maturity buckets.

Q6. Which statement about Treasury Bills in India is correct? [Tricky]

A) They are issued in maturities of 91, 182 and 364 days and carry no coupon

B) They are issued in maturities of 1, 3 and 5 years and carry a fixed coupon

C) They are issued only to foreign institutional investors

D) They are issued by state governments to finance their deficits

Answer: A

Explanation: Treasury Bills are zero-coupon instruments sold at a discount and redeemed at face value.

Q7. What is the purpose of the greenshoe option of up to Rs 2,000 crore per security? [Tricky]

A) It allows the government to cancel an auction if demand is weak

B) It allows the government to retain subscription above the notified amount when demand is strong

C) It obliges the Reserve Bank to buy any unsold portion of the issue

D) It reserves a portion of the issue for green projects only

Answer: B

Explanation: The greenshoe option lets the issuer accept extra subscription without announcing a fresh issue.

Q8. Which of the following correctly distinguishes Ways and Means Advances from market borrowing? [Tricky]

A) Ways and Means Advances are long-term borrowings used to finance the fiscal deficit

B) Ways and Means Advances are raised through weekly auctions open to all investors

C) Ways and Means Advances are grants from the Reserve Bank that need not be repaid

D) Ways and Means Advances are temporary advances from the Reserve Bank to bridge cash flow mismatches, subject to a ceiling

Answer: D

Explanation: For H2 FY 2026-27 the ceiling is Rs 50,000 crore, and the facility covers timing mismatches rather than the deficit.

📜 Previous Year Question Style (PYQ)

PYQ 1:

Which Act replaced the Public Debt Act, 1944 as the legal framework for the issue and transfer of government securities in India?

A) The Fiscal Responsibility and Budget Management Act, 2003

B) The Securities Contracts (Regulation) Act, 1956

C) The Government Securities Act, 2006

D) The Banking Regulation Act, 1949

Answer: C

Explanation: The Government Securities Act, 2006 modernised and replaced the Public Debt Act, 1944.

PYQ 2:

Consider the following statements about the H2 FY 2026-27 borrowing plan:

The government will raise Rs 7,86,000 crore through dated securities in the second half of the year.
Sovereign Green Bonds of 30-year maturity form part of the issuance calendar.
The full-year gross borrowing through dated securities is now expected to exceed the budget estimate of Rs 17,20,000 crore.

Which of the above statements is/are correct?

A) 1 only

B) 1 and 2 only

C) 2 and 3 only

D) All of the above

Answer: B

Explanation: Statements 1 and 2 are correct. Statement 3 is wrong because the expected figure of Rs 15,99,506 crore is below the budget estimate.

PYQ 3:

Assertion (A): The government spreads its borrowing across 23 weekly auctions and eight maturity buckets.

Reason (R): Concentrating a large issue in a single week or a single tenor would push up yields sharply.

A) Both A and R are true, and R is the correct explanation of A

B) Both A and R are true, but R is not the correct explanation of A

C) A is true but R is false

D) A is false but R is true

Answer: A

Explanation: Spreading supply is exactly how the debt manager avoids a supply shock in any one week or tenor.

✍️ Mains Answer Pointers

Question 1 (150 words): Explain how the government's half-yearly borrowing calendar supports orderly debt management.

The calendar announced on 25 September 2026 for the second half of FY 2026-27 shows the mechanics clearly. Rs 7,86,000 crore is to be raised through dated securities, spread across 23 weekly auctions and eight maturity buckets.

Predictability is the first benefit. Investors know in advance how much paper is coming and in which tenor, so they price it with less uncertainty, and a lower risk premium means a lower cost of borrowing for the exchequer.

Distribution is the second. With the 10-year bucket at 26.3 percent and the 15-year at 17.6 percent, and long tenors of 30, 40 and 50 years also on offer, the supply is spread rather than concentrated in a single segment.

Flexibility is the third. The greenshoe option of up to Rs 2,000 crore per security, and monthly switch and buyback auctions, let the government adjust within the announced plan rather than surprising the market.

Question 2 (250 words): Discuss the significance of the government's market borrowing programme for the wider economy, using the H2 FY 2026-27 plan as an illustration.

Market borrowing is the principal means by which the Union Government finances its fiscal deficit, and the plan announced on 25 September 2026 shows both its scale and its reach. The government will raise Rs 7,86,000 crore through dated securities between October 2026 and March 2027, with full-year borrowing now expected at Rs 15,99,506 crore against a budget estimate of Rs 17,20,000 crore.

The first effect is on interest rates. Government securities set the benchmark yield curve, and the tenor mix shapes it directly, with 26.3 percent of issuance in the 10-year bucket, the segment most watched by the market. Corporate bonds and bank lending rates are priced off that curve, so the borrowing calendar reaches every borrower in the economy.

The second effect is on the banking system. Banks hold government securities to meet the statutory liquidity ratio, so a steady, predictable supply matters for their balance sheet planning. Insurers and pension funds absorb the long end, which is why tenors of 30, 40 and 50 years find buyers.

The third effect is developmental. Sovereign Green Bonds of 30-year maturity link borrowing directly to climate-related spending, while the reservation of 5 percent of each issue for retail investors under non-competitive bidding broadens the investor base beyond institutions.

Risks remain. Heavy government borrowing can crowd out private investment if demand for funds is strong, and a long-dated profile locks in today's rates for decades. Keeping the actual borrowing within the announced Rs 15,99,506 crore, and continuing to lengthen maturities gradually rather than abruptly, is the prudent course.

⚠️ Examiner Trap

Trap 1: Students confuse the H2 borrowing figure with the full-year figure. The correct fact is that Rs 7,86,000 crore is the second-half amount, while Rs 15,99,506 crore is the expected full-year borrowing through dated securities.
Trap 2: A common wrong assumption is that Treasury Bills carry a coupon like dated securities. The reality is that Treasury Bills are zero-coupon instruments issued at a discount in maturities of 91, 182 and 364 days.
Trap 3: Many students miss that Ways and Means Advances are not a way of financing the fiscal deficit. Always remember they are temporary advances for cash flow mismatches, capped at Rs 50,000 crore for the second half of FY 2026-27.

Government Borrowing Plan for H2 FY 2026-27: Rs 7.86 Lakh Crore via Dated Securities

What Happened

When & Where

Who Is Involved

Ministry of Finance — decides the borrowing quantum and issues the calendar.
Department of Economic Affairs — the department within the ministry that handles budget and market borrowing policy.
Reserve Bank of India — acts as the government's debt manager and conducts the auctions.
Primary Dealers — market intermediaries obliged to bid in every auction and to underwrite issues.
Banks, insurers and pension funds — the main institutional buyers of government securities.
Retail investors — eligible through the non-competitive bidding facility, which reserves 5 percent of each issue.

How It Works

The budget fixes the fiscal deficit, and the gap between receipts and expenditure is financed mainly by issuing dated securities, so the borrowing calendar follows from the budget arithmetic.
The total is split between the first and second half of the year, and the second-half figure is announced around September so that the market can plan.
The amount is spread across 23 weekly auctions and eight maturity buckets, which prevents a large supply shock in any single week or tenor.
Longer tenors of 30, 40 and 50 years are used to lengthen the average maturity of debt, which reduces the risk of having to refinance a large amount in any one year.
A greenshoe option of up to Rs 2,000 crore per security lets the government retain extra subscription when demand is strong, without announcing a fresh issue.
Switch and buyback auctions held on the third Monday of each month allow the government to exchange near-maturity bonds for longer ones, smoothing the repayment profile.
Ways and Means Advances from the Reserve Bank, capped at Rs 50,000 crore for this half year, cover short-term mismatches between receipts and payments and are not a source of deficit financing.

Why It Matters

Fiscal angle: the full-year expectation of Rs 15,99,506 crore is below the budget estimate of Rs 17,20,000 crore, which signals a smaller call on the market than budgeted.
Monetary angle: the size and tenor mix of government borrowing influence bond yields, which in turn affect lending rates across the economy.
Banking angle: government securities are the main instrument through which banks meet the statutory liquidity ratio, so the supply calendar matters for bank balance sheets.
Environmental angle: the inclusion of 30-year Sovereign Green Bonds ties debt issuance to climate-related public spending.

Historical Background

Previous Related Events

In January 2023 India issued its first tranche of Sovereign Green Bonds, creating the instrument that now appears in the H2 FY 2026-27 calendar.
The Reserve Bank launched the Retail Direct scheme in 2021, allowing individual investors to open gilt accounts and buy government securities directly.
The practice of publishing a half-yearly indicative issuance calendar has been followed for years, and the H2 FY 2026-27 calendar continues that pattern.

Static GK Connection

Dated securities: long-term government bonds carrying a fixed or floating coupon, with maturities of more than one year, issued by the Reserve Bank on behalf of the government.
Treasury Bills: short-term instruments issued at a discount to face value and redeemed at par, in maturities of 91, 182 and 364 days. They carry no coupon.
Ways and Means Advances: temporary advances from the Reserve Bank to the government to bridge timing mismatches in cash flow, subject to a pre-announced ceiling.
Statutory Liquidity Ratio: the share of a bank's net demand and time liabilities that must be held in approved assets, largely government securities.
Greenshoe option: a provision allowing the issuer to accept subscription above the notified amount, used here up to Rs 2,000 crore per security.

India & World Comparison

Future Impact

The actual borrowing against the Rs 7,86,000 crore plan will be tracked auction by auction until 31 March 2027.
The Treasury Bill calendar for the January to March 2027 quarter will be issued separately later in the year.
Bond yields in the October 2026 to March 2027 window will respond to the tenor mix, particularly the 26.3 percent concentration in the 10-year bucket.
Sovereign Green Bond issuance at the 30-year tenor will shape the pricing benchmark for future green debt.

🔑 Key Points for Revision

The H2 FY 2026-27 borrowing plan was announced on 25 September 2026 by the Ministry of Finance.
Rs 7,86,000 crore will be raised through dated securities in the second half of FY 2026-27.
The plan was finalised in consultation with the Reserve Bank of India.
Full-year gross borrowing through dated securities is now expected at Rs 15,99,506 crore.
The budget estimate for FY 2026-27 was Rs 17,20,000 crore.
The H2 amount will be raised in 23 weekly auctions across eight maturity buckets.
The 10-year bucket takes the largest share at 26.3 percent.
The 15-year bucket takes 17.6 percent, the second largest share.
The 3-year bucket takes the smallest share at 6.9 percent.
Sovereign Green Bonds of 30-year maturity are part of the calendar.
A greenshoe option of up to Rs 2,000 crore per security applies.
Five percent of each issue is reserved for retail investors under non-competitive bidding.
Switch and buyback auctions are held on the third Monday of each month.
Treasury Bills worth Rs 23,000 crore will be auctioned weekly in the October to December 2026 quarter.
The Ways and Means Advances limit for H2 FY 2026-27 is Rs 50,000 crore.

🧠 Concept Link (Static GK Deep Dive)

Core Concept: Government Market Borrowing and Public Debt Management

Definition: market borrowing is the raising of funds by the government from the financial market through the issue of dated securities and Treasury Bills.
Constitutional / Legal Basis: the Government Securities Act, 2006 governs the issue and transfer of government securities; the Fiscal Responsibility and Budget Management Act, 2003 sets the fiscal discipline framework.
Scientific / Economic Principle: the underlying idea is deficit financing, where a government bridges the gap between revenue and expenditure by borrowing against future revenue rather than by printing money.
Link to this event: the H2 FY 2026-27 plan of Rs 7,86,000 crore is exactly such a borrowing programme, spread across 23 weekly auctions.
Origin & History: auction-based issuance of government debt was introduced as part of the financial sector reforms of the 1990s.
Key milestone 1: the Fiscal Responsibility and Budget Management Act was enacted in 2003 to place statutory limits on deficits.
Key milestone 2: the Government Securities Act, 2006 replaced the Public Debt Act, 1944.
Related Acts / Schemes / Treaties: the Reserve Bank of India Act, 1934; the Retail Direct scheme launched in 2021; the Sovereign Green Bond framework.
Nodal Ministry / Body: the Department of Economic Affairs in the Ministry of Finance decides policy; the Reserve Bank of India executes the auctions as debt manager.
India-specific relevance: government securities anchor the statutory liquidity ratio, the insurance and pension portfolios, and the benchmark yield curve in India.
Global comparison: most large sovereigns publish indicative calendars; India's distinctive feature is the depth of its very long tenor issuance at 40 and 50 years.
Data point: the 10-year maturity bucket accounts for 26.3 percent of the H2 FY 2026-27 issuance.
Common exam angle: examiners ask which body conducts the auctions, the maturities of Treasury Bills, and the difference between Ways and Means Advances and market borrowing.
Easy memory hook: "91, 182, 364 for bills; more than a year for bonds."

❓ Practice MCQs

Q1. How much will the Government of India borrow through dated securities in the second half of FY 2026-27? [Easy]

A) Rs 5,60,000 crore

B) Rs 11,20,000 crore

C) Rs 7,86,000 crore

D) Rs 15,99,506 crore

Answer: C

Explanation: Rs 7,86,000 crore is the H2 figure; Rs 15,99,506 crore is the expected full-year borrowing.

Q2. Which institution conducts the auctions of government dated securities in India? [Easy]

A) The Securities and Exchange Board of India

B) The Reserve Bank of India

C) The National Stock Exchange

D) The Department of Financial Services

Answer: B

Explanation: The Reserve Bank of India acts as debt manager to the government and conducts the auctions.

Q3. Which maturity bucket carries the largest share of the H2 FY 2026-27 dated securities issuance? [Moderate]

A) 5-year

B) 10-year

C) 15-year

D) 30-year

Answer: B

Explanation: The 10-year bucket accounts for 26.3 percent, ahead of the 15-year bucket at 17.6 percent.

Q4. What is the Ways and Means Advances limit fixed for the second half of FY 2026-27? [Moderate]

A) Rs 20,000 crore

B) Rs 35,000 crore

C) Rs 50,000 crore

D) Rs 75,000 crore

Answer: C

Explanation: The limit was fixed at Rs 50,000 crore to cover temporary cash flow mismatches.

Q5. In how many weekly auctions will the H2 FY 2026-27 dated securities borrowing be completed? [Moderate]

A) 13

B) 18

C) 23

D) 26

Answer: C

Explanation: The Rs 7,86,000 crore will be raised through 23 weekly auctions across eight maturity buckets.

Q6. Which statement about Treasury Bills in India is correct? [Tricky]

A) They are issued in maturities of 91, 182 and 364 days and carry no coupon

B) They are issued in maturities of 1, 3 and 5 years and carry a fixed coupon

C) They are issued only to foreign institutional investors

D) They are issued by state governments to finance their deficits

Answer: A

Explanation: Treasury Bills are zero-coupon instruments sold at a discount and redeemed at face value.

Q7. What is the purpose of the greenshoe option of up to Rs 2,000 crore per security? [Tricky]

A) It allows the government to cancel an auction if demand is weak

B) It allows the government to retain subscription above the notified amount when demand is strong

C) It obliges the Reserve Bank to buy any unsold portion of the issue

D) It reserves a portion of the issue for green projects only

Answer: B

Explanation: The greenshoe option lets the issuer accept extra subscription without announcing a fresh issue.

Q8. Which of the following correctly distinguishes Ways and Means Advances from market borrowing? [Tricky]

A) Ways and Means Advances are long-term borrowings used to finance the fiscal deficit

B) Ways and Means Advances are raised through weekly auctions open to all investors

C) Ways and Means Advances are grants from the Reserve Bank that need not be repaid

D) Ways and Means Advances are temporary advances from the Reserve Bank to bridge cash flow mismatches, subject to a ceiling

Answer: D

Explanation: For H2 FY 2026-27 the ceiling is Rs 50,000 crore, and the facility covers timing mismatches rather than the deficit.

📜 Previous Year Question Style (PYQ)

PYQ 1:

Which Act replaced the Public Debt Act, 1944 as the legal framework for the issue and transfer of government securities in India?

A) The Fiscal Responsibility and Budget Management Act, 2003

B) The Securities Contracts (Regulation) Act, 1956

C) The Government Securities Act, 2006

D) The Banking Regulation Act, 1949

Answer: C

Explanation: The Government Securities Act, 2006 modernised and replaced the Public Debt Act, 1944.

PYQ 2:

Consider the following statements about the H2 FY 2026-27 borrowing plan:

The government will raise Rs 7,86,000 crore through dated securities in the second half of the year.
Sovereign Green Bonds of 30-year maturity form part of the issuance calendar.
The full-year gross borrowing through dated securities is now expected to exceed the budget estimate of Rs 17,20,000 crore.

Which of the above statements is/are correct?

A) 1 only

B) 1 and 2 only

C) 2 and 3 only

D) All of the above

Answer: B

Explanation: Statements 1 and 2 are correct. Statement 3 is wrong because the expected figure of Rs 15,99,506 crore is below the budget estimate.

PYQ 3:

Assertion (A): The government spreads its borrowing across 23 weekly auctions and eight maturity buckets.

Reason (R): Concentrating a large issue in a single week or a single tenor would push up yields sharply.

A) Both A and R are true, and R is the correct explanation of A

B) Both A and R are true, but R is not the correct explanation of A

C) A is true but R is false

D) A is false but R is true

Answer: A

Explanation: Spreading supply is exactly how the debt manager avoids a supply shock in any one week or tenor.

✍️ Mains Answer Pointers

Question 1 (150 words): Explain how the government's half-yearly borrowing calendar supports orderly debt management.

Question 2 (250 words): Discuss the significance of the government's market borrowing programme for the wider economy, using the H2 FY 2026-27 plan as an illustration.

⚠️ Examiner Trap

Trap 1: Students confuse the H2 borrowing figure with the full-year figure. The correct fact is that Rs 7,86,000 crore is the second-half amount, while Rs 15,99,506 crore is the expected full-year borrowing through dated securities.
Trap 2: A common wrong assumption is that Treasury Bills carry a coupon like dated securities. The reality is that Treasury Bills are zero-coupon instruments issued at a discount in maturities of 91, 182 and 364 days.
Trap 3: Many students miss that Ways and Means Advances are not a way of financing the fiscal deficit. Always remember they are temporary advances for cash flow mismatches, capped at Rs 50,000 crore for the second half of FY 2026-27.