New Delhi, Sep 30 (IANS): The Centre on Wednesday said it will borrow Rs 4.34 lakh crore in the second half of the current financial year, sticking to its enhanced borrowing plan of Rs 12 lakh crore for the whole year, while completing the process ahead of schedule in January, leaving ample room for the states and the private sector to borrow from the market to step up investment in a recovering economy.

Briefing media persons on the government's H2 borrowing calendar, Economic Affairs Secretary Tarun Bajaj said that borrowing was raised from the originally budgeted figure of Rs 7.8 lakh crore to Rs 12 lakh crore for this year in May after the country was hit by Covid-19.

"With the opening up of the economy from June, there has been an improvement in revenue and the government has done some expenditure prioritisation. It has now been decided to stick to the levels of borrowing decided in May as that would be sufficient to carry on activities till March 31," he said.

Bajaj said that out of the Rs 12 lakh crore FY21 borrowing, the government has already borrowed an amount of Rs 7.66 lakh crore, which accounts for 63.8 per cent of the target.

Borrowing for the balance Rs 4.34 lakh crore, or 36.16 per cent of the total amount, will now be carried out in 16 weekly tranches, starting October, of Rs 26-28,000 crore each.

The Economic Affairs Secretary said that the entire borrowing programme would be completed by January, as was done last year as well, so that the Centre did not crowd out the private sector which might need to borrow as they continue to recover from the impact of Covid-19 in the third and fourth quarters.

Also, states have been permitted to borrow more this year in wake of the shortfall and enough space will be available for them to borrow.

The weighted average borrowing cost for the government stood at 5.82 per cent, which, Bajaj said, is the lowest borrowing rate in the last 15 years. This is expected to continue in H2. Also, the weighted average maturity of GSecs in H1 was 14.78 years.

In H2, the Centre would issue bonds with tenors of 2, 5, 10, 14, 30 and 40 years. Also, Rs 32,000 crore floating rate bond issue of 13 years maturity will also be issued. With the borrowing plan, ways and means advances limit has come down to Rs 1.25 lakh crore from the raised limit of Rs 2 lakh crore after May.