In an interview, Economic Affairs Secretary Ajay Seth stated that India will proactively manage its cash requirements to ensure the private sector isn't deprived of funds amid tight banking liquidity.

“The government, as a large borrower, is equally conscious of the fact that net available after government borrowing should be sufficient for the private sector,” Seth said in an interview after the federal budget.

The government sets the bond sale figure in its budget at Rs. 14.82 trillion ($171 billion), which is marginally above expectations. However, it stood by the steadfastness of its fiscal discipline, keeping the target for the deficit at 4.4% of GDP for FY starting from April 1, lower than the previous 4.5%.

The liquidity squeeze in the banking system across the country was severe, leaving as much as a deficit in the last month, which was the highest in over a decade, as the central bank sought to steady the rupee through its volatile swings.

“Instead of borrowing large amount and keeping it idle, we will operate it close to ways and means or even in ways and means,” Seth said.

Ways and Means Advances are short-term loans provided by the RBI to the central and state governments to bridge any gap between receipts and payments.

Seth stated that India will continue to swap bonds with the market to defer redemptions and may consider buying back some bonds depending on fund availability in the upcoming fiscal year.

The government has set the bond switch target for the next fiscal year at 2.5 trillion rupees, while no specific amount has been allocated for buybacks, according to budget documents.

Regarding the currency, Seth mentioned that the monetary authority will manage short-term volatility and emphasized that India’s import cover, at 9-10 months, remains "substantial."