India's total public debt (excluding liabilities under the 'Public Account' of the government) increased by 3.7 per cent year-on-year in the first quarter of the current fiscal, compared with an increase of 0.5 per cent in the previous quarter (Q4 of FY'14).
During the first quarter of the 2014-15 fiscal, the government issued dated securities worth Rs1,98,000 crore (33.0 per cent of budget estimates), higher than Rs1,51,000 crore (26.1 per cent of BE) in Q1 of FY14.
Net market borrowings during Q1 of FY'15 at 26.6 per cent of BE were, however, lower than 28.6 per cent of BE in the previous financial year, reflecting higher repayments in the first quarter of this year.
For the 2014-15 financial year (FY15) gross and net market borrowing of the government are projected at Rs6,00,000 crore and Rs4,61,205 crore, respectively, showing an increase of 6.4 per cent and 1.6 per cent, respectively, over 2013-14 (revised estimate) levels of Rs5,63,911 crore (gross) and Rs4,53,902 crore (net), respectively, provisional figures released today showed.
Internal debt constituted 91.4 per cent of public debt as at end-June 2014, while marketable securities accounted for 83.4 per cent of total public debt. About 28.6 per cent of outstanding stock has a residual maturity of up to 5 years, which implies that over the next five years, on an average, 5.6 per cent of outstanding stock needs to be rolled over every year. Thus, the rollover risk in the debt portfolio continues to be low, according to a finance ministry release.
In the secondary market, bond yields opened higher. After initial hardening in yields, G-Secs traded in a narrow range in April 2014, balancing value buying as against poor inflation numbers, sharp depreciation of currency, etc.
During May 2014, market remained generally buoyant amidst pre-election expectations of a clear majority for new government at centre, a decisive mandate in the general election, the commitment shown by the new government on inflation and fiscal deficit front, etc. The yields, however, hardened in quarter end on account of tensions in the Middle East, which pushed crude oil to its highest level in around nine months and kept the rupee under pressure.
Overall bonds yields moderated across the curve as against previous quarter and the yield curve flattened at the longer end. Trading volumes, on an outright basis, were higher by 43.73 per cent over the previous quarter, primarily on account of pre-election expectations of a clear majority for new government and a decisive mandate in the general election. Foreign banks continued to be the dominant trading category though their share in total outright trading activity decreased.