The government is preparing for higher market borrowing in FY26 as COVID-19 pandemic borrowings come up for repayment.

In collaboration with the Reserve Bank of India (RBI), the government has conducted buybacks and switches of dated securities to manage its debt.

In FY25, buybacks worth Rs 80,000 crore and switches totalling Rs 1.35 lakh crore were executed, compared to Rs 1.5 lakh crore worth of G-secs planned for switching in the current fiscal.

These actions have helped address Rs 2.15 lakh crore of COVID-related loans.

The government’s measures are designed to reduce market pressure in FY26 by preventing a large concentration of repayments linked to COVID-related borrowings.

Sources suggest that the government may not pursue further buybacks this fiscal and may choose to use the funds elsewhere, though this still needs to be determined.

Despite the potential shortfall in the Rs 11 lakh crore capex budget, the government plans to maintain its market borrowing level for the current financial year.

As of April-September, only 37.3% of the Rs 11 lakh crore capex budget has been spent.

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