However, there are chances of the central bank paying the government a higher dividend, which could allow for a surprise at the budget presentation on Feb. 1.

The government's gross borrowing is expected to be a record ₹16 trillion (about $196 billion) for the fiscal year through March 2024, according to a Reuters poll of economists.

ICICI Securities Primary Dealership expects net government borrowings of ₹12.5 trillion for the next financial year. In addition, bonds worth ₹4 trillion are set to come up for redemptions in that year.

Typically, these redemptions would be added to the net borrowings to arrive at the expected gross borrowings. However, this year, some of these maturities are of bonds issued to give states GST compensation, economists Prasanna A and Abhishek Upadhyay said in a note.

"Around ₹76,000 crore of GST compensation bonds are due for maturity in FY24. Once we knock these off, the 'true' gross borrowing comes to ₹ ₹15.8 trillion," the economists estimated.

India borrowed ₹1.1 trillion and ₹1.59 trillion in 2020-21 and 2021-22, respectively, to lend to states and compensate for a revenue shortfall from tax collections.

After adjusting for the redemption of such bonds in 2022-23, IDFC First Bank expects gross borrowing of ₹15.50 trillion.

This financial year, the government has switched bonds worth 1 trillion rupees with the market and the Reserve Bank of India (RBI) by replacing bonds coming up for maturity in the next few years with longer-dated securities.

"The gross G-sec issuance can be reduced further by using a combination of switches with the market and RBI," which could lower gross borrowing to ₹15.1 trillion, IDFC First Bank economist Gaura Sen Gupta said in a note.

Then there is also the potential for a surprise on the RBI's dividend payment to the government next financial year.

The RBI, which will declare a dividend after March 31, would likely have booked higher profits due to large dollar sales.

Since 2018/19, the RBI benchmarks dollar sales against its historical cost of buying dollars, which IDFC First Bank estimates at 62.3.

"The RBI dividend is likely to get support from higher dollar sales, with gross sales tracking at $180 billion for April-November, versus $97 billion in FY22," said Sen Gupta.

This, according to Madhavi Arora, economist at Emkay Global Financial Services, could allow the RBI to transfer a dividend of close to 1 trillion rupees to the government, boosting its income and allowing it to keep its borrowing in check.