The government is targeting the second half of the fiscal year to raise funds through overseas bond sales, finance secretary Subhash Chandra Garg said.

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"We will target the second half," Garg told IANS in an interview on being asked if this will happen this fiscal.

The quantum, timing and number as well as market will be decided, including the appointment of merchant bankers which is likely next month, he added.

"The policy announcement has been made that India will be issuing sovereign bonds and the process will start soon," he noted. This will take place when the Centre's second quarter borrowing programme is finalised.

The finance secretary said in 2013, if such bonds had been thought of then it would have been the most inappropriate time to go for it with depleting foreign reserves.

"In 2013 foreign currency reserves were depleted. That type of situation cannot be dealt with by sovereign bonds. That time was the most inappropriate time to think of a sovereign bond when there was a crisis of confidence in the rupee," Garg said.

Faced with the crisis, the then United Progressive Alliance (UPA) government was mulling sovereign bonds to raise capital in foreign shores in 2013 which was ultimately abandoned in favour of a non-resident Indian (NRI) deposit scheme.

"Today we have very good stability. The rupee is stable, foreign reserves are going up to record levels and what we lost last year all have come back. There is a huge demand for swap window RBI

The government is confident there is a high demand for Indian paper more so for sovereign paper, even sub-sovereign issues such as Exim Bank, PFC, IRFC got reasonable rates notwithstanding poor credit ratings. Rating agency Moody's Investors Service upgraded India's local and foreign currency issuer ratings to Baa2 in 2017, which is just a notch above junk.

Economists said there are few options left due to a slowing economy with slow and low tax revenue, while investors have been concerned about plans to borrow a record Rs 7.1 trillion this fiscal year for a host of welfare schemes.

Sovereign bonds in India rallied on Friday after finance minister Nirmala Sitharaman said during her Budget speech that the government would borrow in foreign currency to finance the budget deficit, a move that will ease pressure on local markets and will result in savings in interest cost to the government borrowings, which is Rs 6 lakh crore annually.

The finance ministry has a plan of borrowing Rs 4.42 lakh crore in H1 of FY 2019-20. As per the Union Budget, the gross borrowing was pegged at Rs 7.1 trillion for 2019-20, higher than Rs 5.71 trillion estimated for the ongoing fiscal. Net borrowing would be Rs 3.4 trillion in the first half of the next fiscal. Gross borrowing includes repayments of past loans.

On the Rs 5 lakh crore target for 2024-25, Garg said it will include 12 percent nominal growth for a five-trillion-dollar economy by 2024-25.

"We are in a position to do it," he said while asserting that overspending on public investment to force growth is a short term measure to tackle joblessness and lower growth.

"Joblessness and growth can be dealt with in one or two ways. If you try to do growth solutions in a jiffy, in short term the only way you can probably do it is by highly leveraging and spending where government expands programmes in a big way by borrowing which can bring some growth in the short run but that will spoil the long term growth story of the country.

"There is no short process towards growth and jobs are connected with growth. Without growth there cannot be any additional jobs. You can get the growth in the medium term," he said.

First Published:Jul 7, 2019 7:11 PM IST