India's Borrowing and Rupee Outlook Stable Amid Global Pressures: SBI & Bank of Baroda Reports

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🇮🇳 India’s Market Borrowing Shows Disciplined Stability: SBI Report

India’s sovereign borrowing strategy is evolving with stability and prudence, even as its economic expansion requires rising capital. The State Bank of India (SBI) in its latest research (as of June 13, 2025) confirms that net borrowings remain under control, and the government is showing fiscal restraint in line with FRBM (Fiscal Responsibility and Budget Management) Act objectives.

🔍 FY26 Borrowing Snapshot (as of June 13, 2025)

Metric	Value (₹ Lakh Cr)
Gross G-sec Borrowing	14.8 (BE)
Net G-sec Borrowing	11.5 (BE)
Gross Raised Till Date	3.2
Net Raised Till Date	2.4
Outstanding G-sec Debt	114.5
Switch Borrowing (FY26 BE)	2.5
Buyback Operations (till date)	0.5

This follows a consistent trend of managing borrowing needs effectively. For comparison:

• FY25 net borrowing was ₹10.7 lakh crore.

• FY24 also saw ₹10.7 lakh crore in net borrowing.

📈 G-Sec Debt Trending Up, But Under Watch

India’s outstanding G-sec debt has steadily risen from ₹41.6 lakh crore in FY15 to ₹114.5 lakh crore in FY26 (till date). However, this rise has been cautiously managed with debt switch and buyback mechanisms to ensure future redemption loads are sustainable.

The debt-to-GDP ratio stood at 57.1% in FY25 and is projected to decline to 56.1% in FY26, a positive signal aligned with fiscal consolidation targets.

🏦 Debt switch operations, where older debt is exchanged for longer maturities, and buybacks are being strategically deployed to manage liquidity and mitigate redemption stress.

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💱 Indian Rupee Outlook: Stability Amid Geopolitical Risks

The Bank of Baroda's currency report indicates that the INR is expected to trade between ₹85.25–₹86.25/USD in the near term. While largely stable, the rupee has seen some depreciation pressure in June 2025 due to external shocks.

📉 Recent Rupee Performance

• June 2025 (so far): INR depreciated 0.6%.

• May 2025: INR depreciated 1.3%.

• June 13: Rupee dropped 0.6% in a day after reports of Israel-Iran conflict—its sharpest fall in a month.

Despite these headwinds, the rupee remains relatively stable, thanks to:

• Strong forex reserves by RBI.

• Weaker USD globally: The Dollar Index (DXY) dropped 1.3% in June.

• Increased possibility of a Fed rate cut in Sept 2025 (probability rose from 50% to 60%).

📌 Even amid volatility, India’s macroeconomic buffers—especially robust foreign reserves—are helping contain excessive rupee movement.

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📊 Balancing Short-Term Needs with Long-Term Sustainability

The SBI report noted a dichotomy in India’s debt strategy:

• Short-term issuances help meet immediate funding needs but raise medium-term redemption risks.

• The government is using switch and buyback operations as tools to smoothen the maturity profile and avoid potential liquidity crunches.

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✅ Conclusion: Prudent Borrowing, Resilient Rupee

India’s debt and currency management showcases a fine balance between growth ambition and fiscal discipline. While global factors—ranging from oil prices to geopolitical conflicts—remain risks, data shows a clear trajectory toward financial sustainability.

With net borrowings under control, active debt restructuring, and rupee resilience amid global shocks, India appears well-positioned to maintain economic stability through FY26.

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