Central govt’s liabilities up 3.21% at Rs91,01,484 cr in Q2 FY20
10 Dec 2019
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Total liabilities, including liabilities under the ‘Public Account’ of the central government, increased to Rs91,01,484 crore at end-September 2019 from Rs88,18,392 crore at end-June 2019, an year-on-year increase of 3.21 per cent, the finance ministry stated in its quarterly report on public debt management.
Public debt accounted for 90.2 per cent of total outstanding liabilities at end-September 2019. Nearly 29.1 per cent of the outstanding dated securities had a residual maturity of less than 5 years. The holding pattern indicates a share of 39.7 per cent for commercial banks and 24.9 per cent for insurance companies at end-September 2019.
During Q2 of FY20, the central government issued dated securities worth Rs2,21,000 crore against Rs1,44,000 crore in Q2 of FY19. The weighted average maturity (WAM) of new issuances stood at 15.89 years in Q2 of FY20 (15.86 years in Q1 of FY20). The weighted average yield (WAY) of primary issuances of dated securities for the same quarter was lower at 6.93 per cent compared to 7.21 per cent in Q1 of FY20.
During July-September 2019, the central government raised Rs50,000 crore through the issuance of Cash Management Bills. The net average liquidity absorption by RBI under Liquidity Adjustment Facility (LAF), including MSF, was Rs1,30,902 crore during the quarter.
G-Sec yields softened in Q2 of FY20. The weighted average yield of primary issuances declined to 6.93 per cent from 7.21 per cent in Q1 of FY20. There was also a moderation in yields on G-Secs in the secondary market. The yield on the 10-year benchmark security (7.26 per cent - 2029) was also lower at 6.70 per cent on 30 September 2019 against 6.88 per cent on 1 July 2019.
The softening of yields reflected the impact of several developments, namely, a slight downward revision in the fiscal deficit target to 3.3 per cent of GDP in the Regular Budget for FY20, reduction in the policy repo rate by 35 bps by the Reserve Bank in August, reduction in the target range for the Federal Funds Rate by 25 bps each in July and September 2019, benign CPI-based inflation rates, higher surplus transfer (than budgeted) by the Reserve Bank and surplus liquidity conditions in the market. Central government dated securities continued to account for a major share of total trading volumes in the secondary market, with a share of 85 per cent in total outright trading volumes in value terms during Q2 of FY20.
Public Debt Management Cell (PDMC) (earlier Middle Office), Budget Division, Department of Economic Affairs, ministry of finance has been bringing out quarterly reports on debt management on a regular basis since April-June (Q1) of 2010-11. The current report pertains to the quarter July-September 2019 (Q2 FY20).
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