Public debt rises 0.9% in Jan-March quarter

Government's total debt increased by 0.9% in the fourth quarter ended March 31, over the previous thee-month period of the current financial year.

"The public debt (excluding liabilities under the 'Public Account') of the central government provisionally increased by 0.9% in Q4 of FY 2015 on quarter-on-quarter basis as compared with an increase of 2.4% in the previous quarter (Q3 of FY2015)," a Finance Ministry official statement said.

Internal debt constituted 92.1% of public debt at end of March 2015, while marketable securities accounted for 84.8% of public debt, it said.

About 24.8% of outstanding stock has a residual maturity of up to 5 years, which implies that over the next five years, on an average, around 5.0% of outstanding stock needs to be rolled over every year, it said.

During fourth quarter, the government issued dated securities worth Rs 95,000 crore to complete the borrowings of Rs 5.92 lakh crore projected in revised estimate.

For the entire fiscal, the gross market borrowings were higher by 5 per cent at Rs 5.64 lakh crore than previous year's gross market borrowings.

The net market borrowings, however, were lower by 4.7% at Rs 4.69 lakh crore than previous year reflecting higher repayments during the year 2014-15.

"During the quarter, switch operations of Government of India securities were conducted with a scheduled commercial bank and RBI, wherein securities having face value of about Rs 39,028 crore maturing in 2015-16 and 2016-17 were switched to a longer tenor securities maturing in 2026-27 and 2030-31," it said.

Auctions during the quarter were held broadly in accordance with the pre-announced calendar, it said.

During the quarter, emphasis on re-issues was continued with a view to build up adequate volumes under existing securities imparting greater liquidity in the secondary market, it said.

"The weighted average maturity (WAM) of dated securities issued during Q4 of FY15 at 15.57 years was higher than 14.75 years for dated securities issued in Q3 of FY15," it said.

It further said that the liquidity conditions in the economy remained tight during the quarter, accentuating towards quarter end when liquidity in market tightened on account of financial year end demand. 

The cash position of the government remained comfortable during the quarter, the statement said.

"G sec (10 year) yield after opening at 7.91% softened in January 2015, amid declining crude, following the lower inflation numbers and in expectation of positive rate action from RBI (eventually repo rate under the LAF cut by 0.25% on January 15 by RBI), 10-year paper touched a 19 month low of 7.64% on February 1, 2015," it said.

The market traded in a range in February 2015 and RBI, reduced the SLR by 0.5% to 21.5% with effect from February 7 in its sixth bi-monthly monetary policy review on February 3, 2015, it said.

However, post-presentation of Union Budget 2015-16, despite pre-emptive policy action by RBI, yield hardened marginally in March 2015 owing to financial year end demands for the liquidity, higher than expected inflation number for Feb 2015 and low probability of rate cut after two surprise cuts by RBI, it said.

Compared to previous quarter, owing to policy rate cuts during the quarter, commencement of quantitative easing by ECB and expectations of lower inflation numbers owing to slump in global commodity prices, bonds yields moderated across the curve.

In the final quarter, trading volumes, on an outright basis, were lower by 13.57% over the previous quarter, due to lower trading on account of central government dated securities (decrease of 15.07%).