The Centre was able to save around 75,000 crore in interest costs as it focused on transparency and careful fiscal management between FY20 and FY24, which eased the yields of government securities (G-secs) .
The Center’s fresh borrowing weighted average yield had decreased from 8.42% in 2013-2014 to 6.96% in 2024-25 as of February 10, 2025.
The yield reduction-induced savings were about Rs 75,000 crore between FY20 and FY24 at around Rs 75,000 trillion, telling FE.
Interest savings helped to include committed income spending to the centre, which is already very high. Interest costs for the Centre are likely to rise from the revised estimate of 24% for fiscal 2025 to 25.2%, a budget size of 26%, reflecting a surge in debt accumulation following the Covid pandemic.
However, sound fiscal management, including recognition of out-of-budget liabilities, clearance of delinquent subsidies, and just-in-time release of scheme funding, improved market confidence in government budget parameters. Also, better cash management reduced borrowing requirements compared to what it was in the current scenario, officials believe.
The Centre has announced that the expenditure of the central sponsor scheme for the current fiscal year was 91,000 Rs, or 1.6 trillion Rs from previous transfers, and therefore, by 18% of the estimate of the scheme’s budget, as an inexperienced balance of Rs 91,000, or 1.6 trillion Rs from previous transfers, A 1.6 trillion inexperienced balance with them was found, reducing 18% of budget estimates from the transfer and reflecting the lack. of the state’s absorption capacity.
The unintended savings in the scheme have freed up the Centre resources for other productive purposes, such as buying back on securities worth Rs 88,000 to curb the fast-growing interest costs. The acquisition helped the Centre save about Rs 5,000 in profits, officials said.
In addition to reducing borrowing costs, the centre was able to reduce the risk of rollover. The average maturity of fresh publications for G-SEC increased from 14.49 in 2020-21 to 2024-25 in 2024-25 in 2013.
The state and the private sector benefit from the centre’s fiscal integration. Low centre G-sec yields serve as a benchmark for determining state borrowing and private costs by reducing borrowing costs.
The Centre had unbudget debt of nearly 6.7 trillion Rs by the end of 2021. It brought Rs 5 trillion or 75% of such debt to the balance sheet of FY22 on the 221st. Mainly, the government has raised Rs 4.27 trillion off-budget by the Indian Food Corporation for food subsidies from the National Small Saving Fund (NSSF) in 2017 towards arrears of Indian food subsidies. We have taken over resources (EBR). Another fertilizer subsidy arrears of Rs 67,000 was also cleared by the centre at the same time.
