A combined (Centre+state governments) fiscal deficit below 7% is an important condition for global rating agencies to consider upgrading the country’s sovereign rating, which currently stands at BBB minus.
The fiscal deficit for the Centre is estimated at 4.4% of GDP in FY26, according to the Budget. For states, the fiscal deficit stood at an average of 2.9% in FY 25
In a bond switch, the government replaces bonds maturing in the near term with long- term instruments.
All securities in the switch auction are of papers maturing in FY27, FY28 and FY29, and are being replaced with bonds maturing after FY32, a year where the redemption pressure is relatively less than previous years, RBI data showed.
The centre had budgeted switches worth 2.5 lakh crore for FY26, 60% more than the previous year. Of the total budgeted switches, ₹1.18 lakh crore has already been done since April.
