Status paper on Government Debt 2013

GOVERNMENT DEBT STATUS PAPER MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS BUDGET DIVISION NEW DELHI JULY 2013ÉÊ´ÉkÉ àÉÆjÉÉÒ £ÉÉ®iÉ xÉ<Ç ÉÊnããÉÉÒ-110001 F M INANCE INISTER I NDIA N D -110001 EW ELHI FOREWORD Since 2010 the Central Government has been bringing out an annual Status Paper on public debt that provides a detailed analysis of the overall debt situation of the country. This paper reiterates the Government's commitment to fiscal consolidation, apart from enhancing transparency by providing a detailed account of debt operations and providing an assessment of the health of the public debt portfolio. 2. This Status Paper, the third in the series, covers the debt position of the consolidated government, as at end-March 2013. It includes a detailed discussion on state government debt. There is also a more nuanced assessment on aspects of debt sustainability. To generate debate and discussion that ultimately will be useful as policy inputs, the paper flags some topical issues - e.g., active debt management or sovereign debt issue in external capital markets. 3. The overall liabilities of the Central Government are on a medium-term declining trajectory, notwithstanding the slight increase in recent years, attributable to stimulus spending in the wake of the global financial crisis. The stable and relatively low interest cost - vis-à-vis the rate of economic growth - indicates that India is comfortably placed in terms of sustainability parameters of public debt. 4. The debt portfolio of the Government shows a prudent risk profile. Most of the debt is of domestic origin which insulates the debt portfolio from currency risk. The limited external debt is almost entirely from official sources, proving safety from volatility in the international financial markets. The relatively long maturity of debt and its predominantly fixed-coupon character point to low roll-over and interest rate risks. 5. I hope that this paper is eventually relied on by academics, policy economists, students, rating agencies and the general public as a comprehensive and reliable source of information on India's public debt. New Delhi July, 2013 (P. CHIDAMBARAM)Contents Chapter Particulars Page No. 1. Introduction 1 2. Public Debt - Central Government 7 3. Public Account Liabilities - Central Government 19 4. General Government Debt 23 5. Assessment, Emerging Issues and Road Ahead 29 List of Tables Table No. Particulars Page No. 1.1 Adjustments to the Reported Debt of the Central Government 2 1.2 Debt Position of the Central Government (` crore) 3 1.3 Debt Position of the Central Government (% of GDP) 4 1.4 General Government Liabilities 6 2.1 Share of Public Debt in Total Liabilities 7 2.2 Components of Internal Debt 8 2.3 Outstanding Marketable Dated Securities 9 2.4 Maturity Profile of Outstanding Dated Securities - Central Government 10 2.5 Maturity Trend of Dated Securities 10 2.6 Maturity and Yield of Central Government's Market Loans 11 2.7 Ownership Pattern of Government of India Dated Securities 12 2.8 Outstanding Stock of Treasury Bills 13 2.9 Trends in External Debt 17 2.10 Composition of External Debt 17 2.11 Currency Composition of External Debt 18 3.1 Public Account Liabilities of the Central Government 19 3.2 Liabilities and Assets of NSSF 20 3.3 State Provident Funds 20 3.4 Special Securities Issued in Lieu of Subsidies 21 3.5 Advances 21 3.6 Reserve Funds 22 3.7 Deposits - Interest Bearing and Not Interest Bearing 22 4.1 Financing of Gross Fiscal Deficit 23 4.2 Liability Position of State Governments 24 4.3 Debt-GDP Ratio of State Governments 25 4.4 Composition of Other Liabilities of State Governments 26 4.5 State Government Debt Adjusted for Investment in Treasury Bills 26 4.6 General Government Liabilities 27 5.1 Short-term Debt of the Central Government 29 5.2 Short-term Debt of the State Governments 31 5.3 Short-term Debt of General Government 32 5.4 Floating Debt of the Central Government 34 5.5 Debt-GDP Ratio of the Centre (per cent) 39List of Charts Chart No. Particulars Page No. 1.1 Trends in General Government Liabilities 6 2.1 Trends in Public Debt 7 2.2 Yield and Maturity of Primary Issues 11 2.3 Outstanding Treasury Bills 14 2.4 14 Days Intermediate Treasury Bills 14 4.1 Liabilities of the State Governments 24 4.2 Trends In General Government Liabilities 28 5.1 Composition of Short-term Debt of the Centre 30 5.2 Short-term Debt under Dated Securities of the Centre 30 5.3 Composition of Short-term Debt of States 31 5.4 Short-term Debt of the General Government under Market Loans 32 5.5 Maturity Profile of Central Government Dated Securities 32 5.6 External Debt of the Government 35 5.7 Ownership Pattern of Central Government Securities 38 5.8 Holding Pattern of Government Securities 38 5.9 Trends in Debt-GDP Ratio of the Government 39 5.10 Interest Payments to Revenue Receipts Ratio 40 5.11 Average Interest Cost (AIC) and Nominal GDP Growth 40 List of Boxes Box No. Particulars Page No. 2.1 Evolution of NSSF Investment Mechanism 16 5.1 Active Debt Management 33 5.2 Inflation Indexed Bonds 34 5.3 Comparative Cost of External and Domestic Borrowings 36 Annexes Annex No. Particulars Page No. I Debt Position of the Central Government 43 II Statement Showing Maturing Profile of Market Loans including Floating Rate Bonds (FRBs) and Conversions of Special Securities as on 31st March 2013 44 III Statement Showing Weighted Average Rate of Interest (Maturity year wise) on Market Loans including FRBs, Conversion of Special Securities to Bank and others as on 31st March 2013 45 IV List of Government of India Securities Outstanding as on March 31, 2013 46 V List of Government of India Securities Outstanding as on March 31, 2013- Interest Rate wise 49 VI List of Government Securities Issued to NSSF Outstanding as on March 31, 2013 51 VII Interest Rate on Various Small Savings Instruments 52 VIII Donor-wise Sovereign External Debt 53 IX Currency Composition of Sovereign External Debt 541 Introduction In the Budget speech for 2010-11, Hon’ble adjusted so that the outstanding debt truly reflects Finance Minister proposed to bring out a status the outcome of fiscal operations of the Central paper giving detailed analysis of the government’s Government. The details of these adjustments were debt situation and a road map for curtailing the discussed in the Status Paper for 2010-11, which overall public debt. He also announced that this are briefly explained below. paper would be followed by an Annual Report on (i) Market Stabilisation Scheme (MSS) – the subject. Accordingly, a paper on public debt Securities are issued under MSS (bonds as was brought out by the government during 2010- well as bills) with the objective of sterilising 11 followed by an Annual Status Paper in 2011- the exchange market intervention of the 12. The Status Paper consolidates general Reserve Bank of India (RBI). The proceeds government debt into a single publication. of the issuance are not used to fund the The Status Paper for 2012-13 reinforces the Central Government budget, but Government’s commitment to keep the level of sequestered in an account maintained with public debt within sustainable limits and follow the RBI. The sequestered funds are used to prudent debt management practices. The medium- redeem MSS securities on maturity. The term fiscal policy of the Government is guided by interest/discount burden on these securities the principle of gradual reduction in the ratio of is, however, borne by the Central public debt to GDP so as to contain debt service Government. Thus, MSS securities are burden and create fiscal space for economic purely monetary instrument and not the development. The objective of debt management consequence of fiscal operations. Besides, policy is to mobilise borrowings with long-term their redemption requirement is fully cost efficiency subject to prudent levels of risk in provided for in cash. Therefore, debt raised the debt portfolio. It is also an objective to develop under MSS is netted out of Central a liquid and well functioning domestic debt market. Government debt. I. Central Government Liabilities (ii) External debt – External debt is reported at historical exchange rates in the budget Central Government liabilities include debt documents which doesn’t capture the contracted in the Consolidated Fund of India impact of exchange rate movements on (defined as Public Debt) as well as liabilities in liabilities reported in domestic currency. the Public Account. These liabilities as reported Therefore, external debt is shown at current in the budget documents and finance accounts of (end-of-year) exchange rates. the Central Government are shown in Annex 1. (iii) Liabilities under National Small Savings Adjustment to Reported Central Government Fund (NSSF) - The accumulated balance Debt in NSSF (collections net of withdrawals) Total liabilities1 reported in the budget is invested in special securities issued by documents of the Central Government need to be States and the Central Government as per 1 ‘Liabilities’ includes both public debt and Public Account liabilities unless specified otherwise. The words ‘liabilities’ and ‘debt’ are used interchangeably in the paper.Government Debt : Status Paper prevailing norms. The borrowing from Government reflect the outcome of its own NSSF by the Central Government for fiscal operations. financing its deficit is shown under public These adjustments in Central Government debt debt. The borrowing from NSSF by States are shown in Table 1.1. At end-March 20132, total is shown under public account liabilities of outstanding liabilities of the Central Government the Central Government. The latter is netted amounted to 46.7 per cent of GDP as against 50.3 out so that total liabilities of the Central per cent reported in the budget documents. Table 1.1 : Adjustments to the Reported Debt of the Central Government (` crore) Actuals Provisional Estimates Component RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 1. Total Liabilities Reported in Budget 2538596 2837425 3159178 3529960 3938774 4503252 5039431 5651784 %age of GDP 59.1 56.9 56.1 54.5 50.5 50.2 50.3 49.7 2. MSS Debt 62974 170554 88773 2737 0 0 0 20000 %age of GDP 1.5 3.4 1.6 0.0 0.0 0.0 0.0 0.2 3. External Debt at Historical Rates 102716 112031 123046 134083 157639 170088 172302 182862 %age of GDP 2.4 2.2 2.2 2.1 2.0 1.9 1.7 1.6 4. External Debt at Current Rates 201199 210086 264059 249306 278877 322897 332004 342564 %age of GDP 4.7 4.2 4.7 3.8 3.6 3.6 3.3 3.0 5. Securities issued by States to NSSF 452064 458892 460056 482762 526063 517277 517035 479506 %age of GDP 10.5 9.2 8.2 7.5 6.7 5.8 5.2 4.2 6. Total Adjusted Liabilities (1-2-3+4-5) 2122042 2306035 2751363 3159683 3533950 4138784 4682098 5311980 %age of GDP 49.4 46.2 48.9 48.8 45.3 46.1 46.7 46.7 The effective liability position of the Central total debt at the end-March 2013 while external Government after making the above adjustments, debt constituted the remaining 7.1 per cent. Public in nominal terms and relative to GDP, is presented debt accounts for 86.9 per cent of total liabilities, in Table 1.2 and Table 1.3, respectively. A major while public account liabilities constitute the portion of the outstanding debt is of domestic remaining 13.1 per cent, at the end-March 2013. origin. Internal debt constituted 92.9 per cent of 2 Figures for end-March 2013 pertain to revised estimates (RE) for Central Government and budgets estimates (BE) for State governments. General government debt at end-March 2013 includes RE of Centre and BE of States. 22 The effective liability position of the CentralIntroduction Table 1.2 : Debt Position of the Central Government (` crore) Actuals Provisional Estimates Component RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 A. Public Debt (A1+A2) 1691908 1847891 2203836 2583616 2954700 3539519 4066606 4625874 A1. Internal Debt (a+b) 1490709 1637805 1939776 2334310 2675823 3216622 3734602 4283310 a. Marketable Securities (i+ii) 1155249 1276343 1575036 1966687 2292428 2860805 3373935 3877779 (i) Dated Securities 1081823 1204590 1433720 1832145 2157559 2593770 3061155 3545155 (ii) Treasury Bills 73426 71752 141316 134542 134869 267035 312780 332625 b. Non-marketable Securities (i to iv) 335460 361463 364740 367623 383395 355817 360667 405531 (i) 14 Day Intermediate Treasury Bills 39475 68630 98663 95668 103100 97800 97800 97800 (ii) Compensation & Other Bonds 63585 72814 48996 40221 32495 20208 14843 14322 (iii) Securities issued to International Financial Institutions 25798 24719 23085 24483 29315 29626 31216 70803 (iv) Securities against small savings 206602 195299 193997 207252 218485 208183 216808 222606 A2. External Debt 201199 210086 264059 249306 278877 322897 332004 342564* B. Other Liabilities ( a to d) 430133 458143 547527 576068 579249 599265 615492 686107 (a) National Small Savings Fund 15946 19398 10085 38432 42552 64734 80741 133151 (b) State Provident Fund 71440 75330 83377 99433 111947 122751 132751 142751 (c) Other Account 211452 236373 325383 318749 295989 277904 267675 266688 (d) Reserve funds & Deposit (i + ii) 131295 127043 128682 119453 128762 133877 134325 143517 (i) Bearing Interest 62705 73056 78384 72875 70421 74413 85598 99529 (ii) Not bearing interest 68591 53987 50298 46578 58340 59464 48726 43989 C. Total Liabilities (A+B) 2122042 2306035 2751363 3159683 3533950 4138784 4682098 5311980 * Arrived at by adding net external assistance in 2013-14 to outstanding stock at end-March 2013. 33Government Debt : Status Paper Table 1.3 : Debt Position of the Central Government (% of GDP) Actuals Provisional Estimates Component RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 A. Public Debt (A1+A2) 39.4 37.1 39.1 39.9 37.9 39.4 40.6 40.7 A1. Internal Debt (a+b) 34.7 32.8 34.5 36.0 34.3 35.8 37.3 37.7 a. Marketable Securities (i+ii) 26.9 25.6 28.0 30.4 29.4 31.9 33.7 34.1 (i) Dated Securities 25.2 24.2 25.5 28.3 27.7 28.9 30.5 31.2 (ii) Treasury Bills 1.7 1.4 2.5 2.1 1.7 3.0 3.1 2.9 b. Non-marketable Securities (i to iv) 7.8 7.2 6.5 5.7 4.9 4.0 3.6 3.6 (i) 14 Day Intermediate Treasury Bills 0.9 1.4 1.8 1.5 1.3 1.1 1.0 0.9 (ii) Compensation & Other Bonds 1.5 1.5 0.9 0.6 0.4 0.2 0.1 0.1 (iii) Securities issued to International Financial Institutions 0.6 0.5 0.4 0.4 0.4 0.3 0.3 0.6 (iv) Securities against small savings 4.8 3.9 3.4 3.2 2.8 2.3 2.2 2.0 A2. External Debt 4.7 4.2 4.7 3.8 3.6 3.6 3.3 3.0* B. Other Liabilities ( a to d) 10.0 9.2 9.7 8.9 7.4 6.7 6.1 6.0 (a) National Small Savings Fund 0.4 0.4 0.2 0.6 0.5 0.7 0.8 1.2 (b) State Provident Fund 1.7 1.5 1.5 1.5 1.4 1.4 1.3 1.3 (c) Other Account 4.9 4.7 5.8 4.9 3.8 3.1 2.7 2.3 (d) Reserve funds & Deposit (i+ii) 3.1 2.5 2.3 1.8 1.7 1.5 1.3 1.3 (i) Bearing Interest 1.5 1.5 1.4 1.1 0.9 0.8 0.9 0.9 (ii) Not bearing interest 1.6 1.1 0.9 0.7 0.7 0.7 0.5 0.4 C. Total Liabilities (A+B) 49.4 46.2 48.9 48.8 45.3 46.1 46.7 46.7 * Arrived at by adding net external assistance in 2013-14 to outstanding stock at end-March 2013. A brief description of the major components As at end of March 2013, dated securities (` 30.6 of total liabilities of the Central Government is trillion, 30.5 per cent of GDP) accounted for 75.3 given below. per cent of public debt while treasury bills (` 3.1 A. Public Debt trillion, 3.1 per cent of GDP) accounted for 7.7 per cent. The remaining items in internal debt are A.1. Internal Debt securities issued to NSSF (` 2.2 trillion), securities Internal debt of the Central Government (` 37.3 issued to international financial institutions (` 0.3 trillion, 37.3 per cent of GDP at end-March 2013) trillion) and compensation and other bonds (` 0.1 largely consists of fixed tenor and fixed rate market trillion) which together constituted 6.5 per cent of borrowings, viz., dated securities and treasury bills. public debt. Central Government also issues 14 day 44Introduction Intermediate Treasury Bills to State Governments Governments. That is, it primarily represents the for providing them an avenue to invest their surplus net gain/loss in the NSSF. Liabilities under other cash. At end-March 2013, outstanding amount accounts include special bonds issued to oil under these bills was ` 1.0 trillion or 1.0 per cent marketing companies, fertiliser companies, and of GDP accounting for 2.4 per cent of public debt. FCI. At end-March 2013, these liabilities accounted While treasury bills are issued to meet short-term for 43.5 per cent of public account liabilities. cash requirements of the Government, dated II. Fiscal Consolidation securities are issued to mobilise longer term The Medium Term Fiscal Policy (MTFP) resources to finance the fiscal deficit. All marketable debt is issued through auctions. Statement presented along with the Union Budget Issuance of securities is planned and conducted 2013-14 estimated the ratio of total Central keeping in view the debt management objective of Government liabilities4 to GDP at 45.9 per cent at cost efficiency, prudent levels of risk and market the end-March 2013, and 45.7 per cent at the end- development. Assessment of the market structure March 2014. The ratio is projected to decline to and market appetite for various maturities of debt 42.3 per cent of GDP by end-March 2016. influence and facilitate scheduling of debt issue. The 13th Finance Commission had The weighted average maturity of dated recommended that the Central Government may securities issued in 2012-13 stood at 13.5 years. reduce their debt-GDP ratio to 52.5 per cent by Floating rate instruments constituted 1.2 per cent end of 2011-12 and further to 44.8 per cent by the of public debt while short-term debt constituted end of 2014-15. As seen in Table 1.3, total liabilities 12.9 per cent. of the Central Government stood at 46.7 per cent A.2. External Debt of GDP at end-March 2013 against 46.1 per cent External debt (` 3.3 trillion, 3.3 per cent of at end-March 2012 and 45.3 per cent at end-March GDP as at end-March 2013) constituted 8.2 per 2011. The increase in debt during 2011-12 was due cent of the public debt of the Central Government. to additional borrowings (over budget estimates) As State Governments are not empowered to necessitated by a widening of gross fiscal deficit contract external debt, all external debt is to 5.8 per cent of GDP from budget estimate of 4.6 contracted by the Central Government and those per cent. Increase in debt during 2012-13 was of a intended for State Governments projects are on- lower order as fiscal deficit was restricted to 5.2 lent to States3. Most of the external debt is from per cent of GDP. Nevertheless, the Government multilateral agencies such as IDA, IBRD, ADB etc. recognised this reversal in trend and constituted a A small proportion of external debt originates from Committee on Roadmap for Fiscal Consolidation official bilateral agencies. There is no borrowing (Chairman - V.L. Kelkar, September, 2012) to from international private capital markets. The address the issue. The committee has projected the entire external debt is originally long-term and a debt-GDP ratio of the Central Government to major part is at fixed interest rates. decline to 44.9 per cent at end-March 2014 and B. Public Account Liabilities 42.9 per cent at end-March 2015. Liabilities in the Public Account (` 6.2 trillion, III. General Government Debt 6.1 per cent of GDP at end-March 2013) include General government debt represents the NSSF, provident funds, reserve funds and deposits, indebtedness of the Government sector (Central and other accounts. NSSF liabilities account for and State Governments). This is arrived at by 13.1 per cent of public account liabilities, while consolidating the debt of the Central Government reserve funds and deposits account for 21.8 per cent and state provident fund for 21.6 per cent. and the State governments, netting out inter- NSSF liabilities in the public account represent the governmental transactions viz., (i) investment in total borrowings under small savings less the Treasury Bills by States which represent lending borrowings of the Central Government from NSSF by States to the Centre; and (ii) Centre’s loans to (which is reckoned in public debt) and of State States (Table 1.4) 3 This would require necessary correction while computing the consolidated debt for the country to remove inter-government transactions. 4 This is net of NSSF and MSS liabilities not used for financing Central Governments’ deficit and with external debt at current exchange rate. 55Government Debt : Status Paper Table 1.4 : General Government Liabilities (` crore) Actuals Provisional RE Component 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 1. Total Liabilities of the Centre 2122042 2306035 2751363 3159683 3533950 4138784 4682098 percentage of GDP 49.4 46.2 48.9 48.8 45.3 46.1 46.7 2. Total Liabilities of States 1241580 1328290 1470190 1648650 1828970 2003820 2227740 percentage of GDP 28.9 26.6 26.1 25.5 23.5 22.3 22.2 3. Loans from Centre to States 146653 145098 143870 143152 144170 143548 146280 percentage of GDP 3.4 2.9 2.6 2.2 1.8 1.6 1.5 4. States Investment in Treasury Bills of Centre 73410 96970 100900 92810 110690 118600 146636 percentage of GDP 1.7 1.9 1.8 1.4 1.4 1.3 1.5 5. General Government Liabilities (1+2-3-4) 3143559 3392257 3976783 4572371 5108060 5880457 6616922 percentage of GDP 73.2 68.0 70.6 70.6 65.5 65.5 66.0 At end-March 2013, general government debt ago, the broad declining trend in debt-GDP ratio works out to 66.0 per cent of GDP. Notwithstanding is intact (Table 1.4). Trends in general government a slight increase from 65.5 per cent of GDP a year debt for a longer period is shown in Chart 1.1 IV. Debt Sustainability profile of debt, its composition, cost, share of The recent financial and debt crisis that external debt etc. are important parameters to originated in the developed world has brought into assess sustainability. focus the importance of prudent fiscal management Public debt in India is largely funded through as well as debt management in assessing the domestic savings, at fixed interest rate, with a vulnerability of a Government’s debt position. Any domestic institutional investor base. These factors sustainability analysis in terms of primary surplus improve sustainability of debt in the long term. The and growth-interest rate differential may not be long maturity profile of India’s debt limits rollover adequate to assess the fiscal health of a risks. An assessment of the sustainability public Government. The cost and risk character of the debt stock is also important for determining the stability debt in India in terms of some of these parameters and vulnerability of public debt. Thus, maturity is discussed in the final chapter of this Paper. 662 Public Debt Public Debt, which stood at 40.6 per cent of to GDP ratio increased from 37.1 per cent in 2007- GDP as at end-March 2013, had shown a steady 08 to 39.9 per cent in 2009-10. In 2010-11 growth decline from 48.1 per cent of GDP in 2002-03 to recovered and fiscal deficit dipped to 4.8 per cent, 37.1 per cent in 2007-08 (Chart 2.1). This reduction leading to a decline in public debt to 37.9 per cent in public debt was on account of both fiscal of GDP at end-March 2011. Subsequently, fiscal consolidation as well as high rate of GDP growth. deficit widened again in 2011-12 to 5.7 per cent of This trend reversed marginally during 2008-09 and GDP which alongwith a deceleration in GDP in 2009-10 as fiscal deficit went up due to measures growth led to increase in ratio of public debt to to counter the adverse impact of the global GDP at end-March 2013 to 40.6 per cent. However, financial crisis. As growth slipped to 6.7 per cent the long-term trend of decline in the ratio of public in 2008-09, and borrowings spiked up, public debt debt to GDP is intact. The share of public debt in total liabilities has cent in 2012-13 reflecting the increased recourse to market related instruments for financing the gone up from 80.1 per cent in 2008-09 to 86.9 per fiscal deficit (Table 2.1). Table 2.1: Share of Public Debt in Total Liabilities (%age of Total Liabilities) Actuals Provisional Estimates Component RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 A.Public Debt (A1+A2) 79.7 80.1 80.1 81.8 83.6 85.5 86.9 87.1 A1. Internal Debt (a+b) 70.2 71.0 70.5 73.9 75.7 77.7 79.8 80.6 a. Marketable Securities (i+ii) 54.4 55.3 57.2 62.2 64.9 69.1 72.1 73.0 (i) Dated Securities 51.0 52.2 52.1 58.0 61.1 62.7 65.4 66.7 (ii) Treasury Bills 3.5 3.1 5.1 4.3 3.8 6.5 6.7 6.3 b. Non-marketable Securities (i to iv) 15.8 15.7 13.3 11.6 10.8 8.6 7.7 7.6 (i) 14 Day Intermediate Treasury Bills 1.9 3.0 3.6 3.0 2.9 2.4 2.1 1.8 (ii) Compensation & Other Bonds 3.0 3.2 1.8 1.3 0.9 0.5 0.3 0.3 (iii) Securities issued to International Financial Institutions 1.2 1.1 0.8 0.8 0.8 0.7 0.7 1.3 (iv) Securities against small savings 9.7 8.5 7.1 6.6 6.2 5.0 4.6 4.2 A2. External Debt 9.5 9.1 9.6 7.9 7.9 7.8 7.1 6.4 B. Other Liabilities 20.3 19.9 19.9 18.2 16.4 14.5 13.1 12.9 C. Total Liabilities 100 100 100 100 100 100 100 100 77Government Debt : Status Paper A. Internal Debt5 liabilities) at end-March 2013), securities issued to international financial institutions at 0.8 per cent Internal debt of the Central Government at 37.3 of internal debt (0.8 per cent of total public debt per cent of GDP, constituted 91.8 per cent of public and 0.7 per cent of total liabilities) and debt at end-March 2013 (Table 2.2). Marketable compensation and other bonds at 0.4 per cent of instruments (dated securities and treasury bills) internal debt (0.4 per cent of public debt and 0.3 constituted 90.3 per cent of internal public debt per cent of total liabilities). Central Government (83.0 per cent of public debt and 72.1 per cent of also issues 14 day Intermediate Treasury Bills to total liabilities) at the end-March 2013. Majority the States governments to facilitate them investing of these instruments are of fixed tenor and fixed their surplus cash. As at end-March 2013, rate. outstanding amount under these non-marketable Non-marketable securities consist of securities instruments at ` 97,800 crore constituted 2.6 per issued to NSSF at 5.8 per cent of internal debt (5.3 cent of internal debt (2.4 per cent of public debt per cent of public debt and 4.6 per cent of total and 2.1 per cent of total liabilities). Table 2.2: Components of Internal Debt (%age of Internal Debt) Actuals Provisional Estimates Component RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 Internal Debt (a+b) 88.1 88.6 88.0 90.4 90.6 90.9 91.8 92.6 a. Marketable Securities (i+ii) 68.3 69.1 71.5 76.1 77.6 80.8 83.0 83.8 (i) Dated Securities 63.9 65.2 65.1 70.9 73.0 73.3 75.3 76.6 (ii) Treasury Bills 4.3 3.9 6.4 5.2 4.6 7.5 7.7 7.2 b. Non-marketable Securities (i to iv) 19.8 19.6 16.6 14.2 13.0 10.1 8.9 8.8 (i) 14 Day Intermediate Treasury Bills 2.3 3.7 4.5 3.7 3.5 2.8 2.4 2.1 (ii) Compensation & Other Bonds 3.8 3.9 2.2 1.6 1.1 0.6 0.4 0.3 (iii) Securities issued to International Financial Institutions 1.5 1.3 1.0 0.9 1.0 0.8 0.8 1.5 (iv) Securities against small savings 12.2 10.6 8.8 8.0 7.4 5.9 5.3 4.8 Memo Items I. Securities Issued under MSS (a+b) 3.7 9.2 4.0 0.1 0.0 0.0 0.0 0.4 (a) Dated Securities 1.3 6.9 3.6 0.1 0.0 0.0 0.0 0.4 (b) Treasury Bills 2.4 2.3 0.4 0.0 0.0 0.0 0.0 0.0 5 Debt contracted under Consolidated Fund of India from domestic lenders i.e., debt excluding external debt and public account liabilities. 88Public Debt The following sections provide details of 2011 to 73.3 per cent at end-March 2012 and further to 75.3 per cent at end-March 2013, various components of internal debt. underscoring the increasing reliance on dated a. Market Loans – Dated Securities securities to finance the budget deficit and the Dated securities are the predominant gradual shift away from non-marketable instruments used for financing the fiscal deficit. instruments. Apart from issuance to finance fiscal deficit, dated securities have also been issued in They are issued through auctions as per two half- conversion of (i) securities created in the past in yearly issuance calendars covering April- lieu of ad-hoc treasury bills (process completed in September and October-March, respectively, every 2003-04) and (ii) recapitalisation bonds issued to financial year. The share of dated securities in nationalised banks, (completed in 2007-08). public debt has been gradually increasing over the Breakup of the stock of dated securities is given in years. It increased from 73.0 per cent at end-March Table 2.3. Table 2.3: Outstanding Marketable Dated Securities (` crore) Actuals Provisional Estimates Component RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 (i) Issued through Borrowings 972797 1092464 1326094 1734518 2059932 2496144 2963528 3451528 (ii) Conversion of Special Securities issued in lieu of ad-hoc Bills 100318 91318 86818 76818 76818 76818 76818 72818 (iii) Conversion of recapitalisation bonds issued to Nationalised Banks 8708 20809 20809 20809 20809 20809 20809 20809 Total Dated Securities (i to iii) 1081823 1204590 1433720 1832145 2157559 2593770 3061155 3545155 Percentage of Internal Debt 72.6 73.5 73.9 78.5 80.6 80.6 82.0 82.8 Percentage of Public Debt 63.9 65.2 65.1 70.9 73.0 73.3 75.3 76.6 Percentage of Total Liabilities 51.0 52.2 52.1 58.0 61.1 62.7 65.4 66.7 Percentage to GDP 25.2 24.2 25.5 28.3 27.7 28.9 30.5 31.2 Memo: MSS Securities 22000 128317 79773 2737 0 0 0 20000 During 2012-13, net borrowing through dated during 2012-13 were less than the budget estimate securities was ` 4.67 trillion and it financed 89.7 of ` 4.79 trillion enabled by containment in per cent of the fiscal deficit. The actual borrowings expenditure. 99Government Debt : Status Paper Maturity Profile of Dated Securities securities at the end of 2012-13 increased to 9.7 The tenor of dated securities goes up to 30 years from 9.6 years as at end-March 2012 (Table years. While it has generally been the endeavour 2.6). to elongate the maturity profile, the tenor of new During 2012-13 there was a decline in the share issuances is a function of acceptable roll over risk of debt with maturity above 20 years (Table 2.4). as well as market appetite across various maturity The proportion of debt maturing in less than 5 years segments. While the weighted average maturity of witnessed some increase during 2012-13, although securities issued during 2012-13 increased to 13.5 it remained around 30 per cent indicating a years from 12.7 years in 2011-12, the weighted average maturity of outstanding stock of dated relatively low roll-over risk in the medium-term. Table 2.4: Maturity Profile of Outstanding Dated Securities-Central Government Maturity Bucket End-March 2013 End-March 2012 1 2 3 (percentage of total outstanding) Less than 1 year 3.1 3.5 1-5 Years 27.9 26.7 5-10 Years 35.0 34.7 10-20 Years 22.9 22.0 20 years and above 11.2 13.1 The redemption profile of outstanding on an average, about 6 per cent of outstanding stock government securities in the next 5 years at end- matures annually, over the next 5 years. This places March 2013 is given in Table 2.5. The redemption the portfolio in a comfortable position in terms of obligation increases noticeably during 2014-15 rollover risk. through 2016-17. Notwithstanding this increase, Table 2.5: Maturity trend of dated securities Items 2013-14 2014-15 2015-16 2016-17 2017-18 1 2 3 4 5 6 Maturity during the year (` crore) 95009 168018 197244 231130 256774 Percentage of outstanding stock* 3.1 5.5 6.4 7.6 8.4 Percentage of GDP 0.8 1.3 1.3 1.4 1.3 * Outstanding as on 31 March,2013 The details of maturity and yield of Central are given in Table 2.6. Further details of maturity Government’s dated securities in the recent years profile are given at Annex II. 1100Public Debt Table 2.6: Maturity and Yield of Central Government’s Market Loans Issues during the year Outstanding Stock Year Weighted Average Weighted Average Weighted Average Weighted Average Yield (%) Maturity (Yrs) Coupon (%) Maturity (Yrs) 1 2 3 4 5 2003-04 5.71 14.94 9.30 9.78 2004-05 6.11 14.13 8.79 9.63 2005-06 7.34 16.90 8.75 9.92 2006-07 7.89 14.72 8.55 9.97 2007-08 8.12 14.90 8.50 10.59 2008-09 7.69 13.81 8.23 10.45 2009-10 7.23 11.16 7.89 9.67 2010-11 7.92 11.62 7.81 9.64 2011-12 8.52 12.66 7.88 9.60 2012-13 8.36 13.50 7.97 9.66 While the weighted average maturity of function of the interest rate environment and to a securities issued during 2012-13 increased to 13.5 much lesser extent, on the shape of the yield curve. years from 12.7 years in 2011-12, the weighted Chart 2.2 depicts the yield and maturity of dated average yield declined to 8.36 per cent from 8.52 securities issued during the year since 1997-98. per cent in 2011-12. The average yield is largely a 1111Government Debt : Status Paper Ownership pattern continued the decline to register 43.9 per cent by March 2013. Over the financial year 2012-13, the Ownership pattern of dated securities indicates a share of RBI increased from 14.4 per cent to 17.0 gradual broadening of market over time. The share per cent while that of provident funds remains at of commercial banks (including banks that are 7.4 per cent. The increase in RBI’s share is on primary dealers), which had dropped from 50.9 per account of open market operations to address cent in March 2008 to 46.1 per cent in March 2012 liquidity shortage (Table 2.7). Table 2.7: Ownership Pattern of Government of India Dated Securities (Per cent) Category 2008 2009 2010 2011 2012 2013 (end-March) 1 2 3 4 5 6 7 Commercial Banks 42.51 38.85 38.03 38.42 36.28 34.50 Bank-Primary Dealers 8.41 8.05 9.22 8.61 9.83 9.36 Non-Bank PDs 0.34 0.29 0.14 0.11 0.10 0.11 Insurance Companies 24.78 23.20 22.16 22.22 21.08 18.56 Mutual Funds 0.79 0.82 0.40 0.18 0.17 0.68 Co-operative Banks 3.22 2.92 3.35 3.41 2.98 2.81 Financial Institutions 0.41 0.41 0.35 0.35 0.37 0.75 Corporates 3.48 4.72 2.99 1.94 1.38 1.14 FIIs 0.52 0.24 0.59 0.97 0.88 1.61 Provident Funds 6.38 6.59 6.76 7.06 7.45 7.37 RBI 4.78 9.71 11.76 12.84 14.41 16.99 Others 4.37 4.20 4.24 3.89 5.07 6.12 Total 100 100 100 100 100 100 Source: Monthly Bulletin, RBI, issues of various quarters. Note: (1) Government of India dated securities includes securities issued under the Market Stabilisation Scheme and the Special Securities like bonds issued to the Oil Marketing Companies, etc. (2) The data are provisional in nature and subject to revisions. The information on category-wise outstanding amounts of Government Securities is disseminated on an annual basis through the Handbook of Statistics on the Indian Economy published by the Reserve Bank of India. Coupon Rate on Dated Securities Dated securities are listed in Annex IV. At the end of March 2013, 13.5 per cent of existing dated Most of the dated securities carry fixed rate of securities have fixed coupon rate up to 7 per cent; interest. However, there is a small proportion of 32.4 per cent carry coupon rate of more than 7 per floating rate instruments (1.4 per cent of dated cent and up to 8 per cent, 45.6 per cent carry coupon securities at end-March 2013) whose coupon is rate of above 8 per cent and up to 9 per cent; and benchmarked to treasury bill yields. The weighted 8.6 per cent of total dated securities carry coupon average coupon of dated securities (including rate of more than 9 per cent. Thus, 45.9 per cent of floating rate bonds) was 7.97 per cent at end-March dated securities carried a coupon rate up to 2013, up from 7.88 per cent at end-March 2012. 8 per cent. 1122Public Debt b. Treasury Bills intermediate treasury bills (ITBs) are issued to state governments and some central banks. This section Treasury bills are discounted instruments which help the government in managing its short analyses the marketable treasury bills while ITBs term cash flow mismatches. They also provide are analysed in a separate section. short term investment instruments for the market Treasury Bills have a marginal contribution in and play the role of money market benchmarks. financing fiscal deficit. Large unanticipated Treasury bills are issued for 91, 182, and 364 days. increase in deficit, compared to budget estimates, While 91-days treasury bills are auctioned every in 2008-09 and 2011-12 necessitated higher use of week, 182 and 364 days treasury bills are auctioned bills to fund the fiscal deficit. The increase in stock every fortnight. Auction calendars for treasury bills of bills during these years is shown in Table 2.8. are announced quarterly. Non-market 14-day Table 2.8: Outstanding Stock of Treasury Bills (` crore) Actuals Provisional Estimates Component RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 91 Day Treasury Bills 30802 30371 75595 71549 70391 124656 117307 137152 182 Day Treasury Bills 9256 9180 20175 21500 22001 52001 65003 65003 364 Day Treasury Bills 33369 32201 45546 41493 42478 90378 130470 130470 Total Outstanding Treasury Bills 73426 71752 141316 134542 134869 267035 312780 332625 Percentage of Internal Debt 4.9 4.4 7.3 5.8 5.0 8.3 8.4 7.8 Percentage of Public Debt 4.3 3.9 6.4 5.2 4.6 7.5 7.7 7.2 Percentage of Total Liabilities 3.5 3.1 5.1 4.3 3.8 6.5 6.7 6.3 Percentage of GDP 1.7 1.4 2.5 2.1 1.7 3.0 3.1 2.9 Memo: Issued under MSS 91 Day Treasury Bills 14209 9632 0 0 0 0 0 0 182 Day Treasury Bills 7675 7605 0 0 0 0 0 0 364 Day Treasury Bills 19090 25000 9000 0 0 0 0 0 Total Outstanding Treasury Bills -MSS 40974 42237 9000 0 0 0 0 0 Stock of treasury bills has gradually increased account for 6.7 per cent of total liabilities (7.7 per from 2.5 per cent of GDP in 2008-09 to 3.1 per cent of public debt) at end-March 2013. cent at end-March 2013 (Chart 2.3). Treasury bills 1133Government Debt : Status Paper c. 14 Day Intermediate Treasury Bills existing investment in these instruments. These 14-days Intermediate Treasury Bills (ITBs) are instruments carry a fixed yield of 5 per cent per non-marketable instruments issued to the State annum (rediscounting at 4 per cent per annum). Governments (and a few central banks) to enable Significant accumulation of surplus cash with them to deploy their short term cash surplus. The states during the last 6-7 years is reflected in surplus cash balance of a State Government is increased investment in 14-day ITBs. Investment automatically invested in these instruments. of States in these instruments went up from ` 7,253 Conversely, a negative cash position of a State crore at end-March 2004 to ` 97,800 crore at end- Government is financed first by rediscounting March 2013 (Chart 2.4). Although this instrument was intended for instruments have little importance from a deployment of temporary cash surpluses of States, consolidated general government debt perspective. over the years, investment under this instrument From a debt management perspective, however, if has become durable in nature. Being automatic there is sharp decline in investment in these instruments, Central Government has practically instruments, the impact on Centre’s cash no control over the accumulation of this instrument. Being inter-governmental transactions, these management might be significant. 1144Public Debt d. Cash Management Bills f. Market Stabilisation Scheme (MSS) During 2009-10 a new short-term instrument, known as Cash Management Bills (CMBs) was Securities (bonds and bills) are issued under introduced to meet unanticipated cash flow the Market Stabilization Scheme to facilitate mismatches of the Government. CMBs are non- Reserve Bank’s monetary sterilisation needs. They standard, discounted bills issued with a maturity were issued for the first time in 2004-05. Detail of of less than 91 days. The tenor, notified amount the Scheme was given in earlier Status Papers. and date of issue of this instrument depends upon There was no requirement for issuance of securities the cash requirements of the Government. As under the scheme in recent years after outstanding CMBs are generally repaid in the same financial securities matured by the end of 2009-10. As year, they do not finance the budget deficit. discussed earlier, the proceeds of the issuance is During 2011-12, government had to actively not used to fund the Central Government budget, use this instrument to meet cash shortages due to but is sequestered in a account maintained with higher direct tax refunds in the beginning of the the RBI. The funds are eventually used to meet financial year and shortfall in small savings redemption of such securities. collection during the year. CMBs were not issued g. Compensation and other Bonds in 2012-13. e. Securities issued to International This category includes various types of special Financial Institutions purpose bonds issued in the past by the Central Government. Some of these bonds were also open These securities are issued to International for retail subscription. These bonds carry fixed Monetary Fund, International Bank for rates of interest. The importance of this component Reconstruction and Development, International has been reducing over the years. Their stock has Development Association, Asian Development declined from ` 63,585 crore in 2006-07 amounting Bank, African Development Fund & Bank and to 1.5 per cent of GDP to ` 14,843 crore at the International Fund for Agricultural Development. These special securities are issued primarily end-March 2013 amounting to 0.1 per cent of GDP. towards They account for 0.4 per cent of public debt at end- March 2013, down from 0.6 per cent at end-March i. India’s subscriptions/contributions to these 2012. institutions; h. Securities against small savings ii. Special Drawing Rights (SDRs) for (National Small Saving Fund) subscribing to India’s quota increase in the IMF; All collections under small savings schemes6 iii. Maintenance of value obligations to IMF; are credited to the National Small Savings Fund and (NSSF), established in the Public Account of India with effect from 1.4.1999. Accumulated liabilities iv. Purchase transactions under the Financial at the inception of NSSF (` 1,76,221 crore) were Transaction Plan. borne by the Central Government, of which These liabilities are non-interest bearing in ` 64,569 crore amounting to 0.6 per cent of GDP nature. The total outstanding value of these rupee was outstanding as at end-March 2013. All securities issued to International Financial withdrawals as well as interest payments are made Institutions as at the end-March 2013 is ` 31,216 out of the accumulations in this Fund. The balance crore, or 0.3 per cent of GDP, showing a marginal amount after withdrawal is invested in States’ and increase from ` 29,626 crore as at end-March 2012. Central government special securities as per norms They account for 0.8 per cent of public debt and 0.7 per cent of total liabilities of the Central decided from time to time by the Central Government. Government (Box 2.1). 6 see box 2.1 for small saving schemes and prevailing interest rates. 1155Government Debt : Status Paper Box 2.1 : Evolution of NSSF Investment Mechanism National Small Savings Fund (NSSF) was created in 1999 to replace the earlier system under which small savings collections were first credited to the consolidated fund and then a part of it on lent to the States. Under the current arrangement, all small savings collections are credited into NSSF. After meeting the redemption payments to small savers, net funds are loaned to Central Government and States’/UT governments’ in prescribed ratios. All loans are against issue of special securities by the borrower, deemed as investments of NSSF. Sharing of NSSF Funds Investible funds of NSSF arise under two heads (i) net collections during a year and (ii) repayment of past loans from NSSF by Centre and States. The norms for sharing of net collections between Centre and States have been changed from time to time. In 1999-00, 75 per cent of net collections was lent to States (the remaining portion was lent to the Centre) which was increased to 80 per cent in 2000-01. From 2002-03 onward, the entire net collections of NSSF were made available to States. The allocation was changed again in 2007-08 on the recommendations of the sub-committee of the National Development Council (NDC) whereby States were allowed to opt for a share in net collections of NSSF between 80 per cent and 100 per cent. On the recommendations of the Committee for Comprehensive Review of NSSF, minimum share of 80 per cent for States was reduced to 50 per cent in 2012-13 with the option to States to take the entire net collections. The remaining amount is lent to the Central Government or other willing States or to infrastructure companies wholly owned by the Central Government. Amounts received on redemption of securities were loaned to the Central Government until 2007-08, after which such sums were allowed for investment in other instruments as well. A sum of ` 15,000 crore was invested as a loan of 15 years at 9.00 per cent to India Infrastructure Finance Company Limited (IIFCL) in 2007-08. From 2012-13, redemption amount is loaned to Centre and States in the ratio of 50:50. Interest Rate and Maturity In each of the years from 1999-2000 to 2001-02, interest rate on loans to States was fixed at 13.5 per cent, 12.5 per cent and 11.0 per cent, respectively. From 2002-03 onward, interest rate was fixed at 9.5 per cent. Following the recommendations of the sub-committee of the NDC, interest rates on securities issued by State governments for the years 1999-2000 to 2001-02 were reset at 10.5 per cent per annum with retrospective effect from April 01, 2007. Pursuant to the recommendations of the 13th Finance Commission, as part of debt relief linked to achievement of targets under FRBM Acts, interest rates were again re-set at 9.0 per cent for loans to State Governments made up to 2006-07 and outstanding at end of 2009-10. States deviating from FRBM targets would forego the benefit of lower interest rates. The maturity of securities issued by Central and State Governments was 25 years with a moratorium of 5 years. The maturity of securities issued by Central Government against redemption amount was 20 years with interest rates fixed at an average interest cost of dated securities of the Central Government. From 2012-13 onward, maturity period of all loans to Centre and States was reduced to 10 years without any moratorium on repayment. Further, interest rate was made payable half-yearly as against annual payments earlier. At end-March 2013, the outstanding liabilities collections in various years amounted to ` 0.32 of the Central government to NSSF was ` 2.17 trillion and securities issued against redemption trillion amounting to 5.3 per cent of public debt amounted to ` 1.20 trillion at end-March 2013. The and 4.6 per cent of total liabilities. Outstanding details of existing special securities with applicable securities issued against fresh loans out of net interest rates are shown in Annex VI. 1166Public Debt B. External Debt Central Government increased to ` 3.32 trillion (US $ 61.32 billion; 3.3 per cent of GDP) from Under Article 292 of the Constitution of India, ` 3.23 trillion (US $ 63.37 billion) at end-March the Central Government may borrow from within 2012. This amounts to 7.1 per cent of Central as well as outside the territory of the Country7. The Government’s total liabilities and 5.0 per cent of Central Government receives external loans largely general government debt. The trends in external from multilateral agencies and to some extent from debt at book value and current exchange rate are foreign countries also. External debt at current exchange rates, as at end-March 2013, for the shown in Table 2.9. Table 2.9: Trends in External Debt (` crore) Actuals Provisional RE Component 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 1. External Debt (at Book Value) 102716 112031 123046 134083 157639 170088 172302 percentage of GDP 2.4 2.2 2.2 2.1 2.0 1.9 1.7 2. External Debt (at current exchange rate) 201199 210086 264059 249306 278877 322897 332004 Percentage of Public Debt 11.9 11.4 12.0 9.6 9.4 9.1 8.2 Percentage of Total Liabilities 9.5 9.1 9.6 7.9 7.9 7.8 7.1 Percentage of GDP 4.7 4.2 4.7 3.8 3.6 3.6 3.3 Percentage of General Government debt 6.4 6.2 6.6 5.5 5.5 5.5 5.0 External debt (at current exchange rate) as multilateral institutions (71.0 per cent of total percentage of GDP has consistently declined in the external debt at end-March 2013), while bilateral sources account for the remaining 29.0 per cent recent years, indicating that reliance on external (Table 2.10). Loans from multilateral institutions debt for financing of deficit is declining. This are largely on concessional terms. The Central implies that debt portfolio of Government has low Government does not borrow directly in currency risk and its impact on balance of payments international capital markets. The details on also remains insignificant. agency wise outstanding external loans as on A major portion of the external debt is from 31.3.2013 are shown in Annex VIII. Table 2.10: Composition of External Debt Actuals Provisional Creditor Category 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 Multilateral Debt as percentage of Total External Debt 70.4 68.8 68.9 68.5 68.2 68.9 71.0 Bilateral Debt as percentage of Total External Debt 29.4 31.2 31.1 31.5 31.8 31.1 29.0 7 Executive power of State Governments extends only to borrow within the territory of India as per Article 293 of the Constitution. 1177Government Debt : Status Paper External debt is predominantly denominated external debt. A small portion (4.6 per cent) is in three currencies viz., SDR, USD and Yen. At denominated in Euro. Other currencies mainly end-March 2013, debt denominated in these three comprise of Rupee denominated debt to Russia currencies represented 95.1 per cent of total (Table 2.11). Table 2.11: Currency Composition of External Debt (per cent of total external debt) Actuals Provisional Currency 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 SDR 44.1 42.9 40.6 39.7 37.6 37.8 38.2 US Dollar 29.9 29.4 31.9 32.2 33.6 33.5 35.0 YEN 18.9 20.6 21.4 22.5 23.6 23.7 22.0 Euro 6.5 6.6 5.7 5.2 4.9 4.8 4.6 Others 0.6 0.5 0.4 0.4 0.3 0.3 0.2 To summarise the Chapter, public debt as public debt. Maturity profile of outstanding dated percentage of GDP has shown a long-term securities indicates a relatively low roll-over risk declining trend. Internal debt constitutes a major in the debt portfolio. Weighted average yield of part of public debt with the share of external debt primary issuance of dated securities has remained being less than 10 per cent. Within the internal broadly stable in the recent years. The share of debt, the share of marketable debt has increased external debt in the public debt has consistently consistently over time. Fixed coupon dated declined over time and majority of external debt is securities constitute a major portion of the internal on concessional terms. 11883 Public Account Liabilities All public moneys received by or on behalf savings collections into NSSF, provident fund of the Government of India, other than those contribution of government employees, security which are for credit to the Consolidated Fund of deposits and other deposits received by the India, are credited to the Public Account of India8. Government, securities issued in lieu of oil/food/ The receipts into the Public Account and fertilizer subsidies, balances under various disbursements out of it are generally not subject suspense and remittance heads, etc. The public to vote by the Parliament. Receipts under public account liabilities position of the Central account in the form of liabilities include small Government is presented in Table 3.1. Table 3.1: Public Account Liabilities of the Central Government (` crore) Components Actuals Provisional Estimates RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 A. Public Debt 1691908 1847891 2203836 2583616 2954700 3539519 4066596 4625864 Per cent of Total Liabilities 79.7 80.1 80.1 81.8 83.6 85.5 86.9 87.1 B. Other Liabilities ( a to d) 430133 458143 547527 576068 579249 599265 615492 686107 Per cent of TL 20.3 19.9 19.9 18.2 16.4 14.5 13.1 12.9 (a) National Small Savings Fund 15946 19398 10085 38432 42552 64734 80741 133151 Per cent of TL 0.8 0.8 0.4 1.2 1.2 1.6 1.7 2.5 (b) State Provident Fund 71440 75330 83377 99433 111947 122751 132751 142751 Per cent of TL 3.4 3.3 3.0 3.1 3.2 3.0 2.8 2.7 (c) Other Account 211452 236373 325383 318749 295989 277904 267675 266688 Per cent of TL 10.0 10.3 11.8 10.1 8.4 6.7 5.7 5.0 (d)Reserve funds & Deposit 131295 127043 128682 119453 128762 133877 134325 143517 Per cent of TL 6.2 5.5 4.7 3.8 3.6 3.2 2.9 2.7 Bearing Interest 62705 73056 78384 72875 70421 74413 85598 99529 Per cent of TL 3.0 3.2 2.8 2.3 2.0 1.8 1.8 1.9 Not bearing interest 68591 53987 50298 46578 58340 59464 48726 43989 Per cent of TL 3.2 2.3 1.8 1.5 1.7 1.4 1.0 0.8 C. Total Liabilities (TL) (A+B) 2122042 2306035 2751363 3159683 3533950 4138784 4682098 5311980 Public account liabilities, at ` 6.15 trillion at March 2012. Indeed, the share of public account end-March 2013 constituted 13.1 per cent of total liabilities has seen a steady decline since 2006-07 liabilities, a decline from 14.5 per cent at end- when it accounted for 20.3 per cent of total 8 clause (2) of Articile 266 of the Constitution of India 1199Government Debt : Status Paper liabilities. The major categories under this head which is utilized for financing State Government are discussed below: budget deficits, is excluded from Centre’s (a) National Small Savings Fund (NSSF) liabilities. The liabilities of the Central Government in the public account under the head Liabilities of NSSF constitute the liabilities of ‘NSSF’ represent the accumulated historical net the Central Government. However, as explained earlier, only a part of the liabilities under NSSF cash position of NSSF. It can also be viewed as are utilized for financing the fiscal deficit of the the net asset-liability position of NSSF. Trends Central Government and that part is explicitly in assets and liabilities of NSSF are given in included in internal debt. The remaining part, Table 3.2. Table 3.2 : Liabilities and Assets of NSSF (` crore) Components Actuals Provisional Estimates RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 1. Total Liabilities 674611 673589 664137 728446 787100 790194 805959 820839 2. Borrowings by Centre 206602 195299 193997 207252 218485 208183 216808 222606 3. Borrowings by States 452064 458892 460056 482762 526063 517277 517035 479506 4. Loan to IIFCL - - - 1500 1500 1500 1500 1500 5. Net Liabilities (1-2-3-4) 15946 19398 10085 36932 41052 63234 70616 117228 6. Total Liabilities % of GDP 15.7 13.5 11.8 11.2 10.1 8.8 8.0 7.2 7. Net Liabilities % of GDP 0.4 0.4 0.2 0.6 0.5 0.7 0.7 1.0 (b) State Provident Funds slightly down from 3.0 per cent at end-March 2012. Accumulated Provident Fund contributions of This share has been by and large stable at around Central Government employees accounted for 2.8 3 per cent since 2006-07 or around 1.5 per cent of per cent of total liabilities at end-March 2013, GDP (Table 3.3). Table 3.3: State Provident Funds (` crore) Components Actuals Provisional Estimates RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 State Provident Funds 71440 75330 83377 99433 111947 122751 132751 142751 Percentage of Total Liabilities 3.4 3.3 3.0 3.1 3.2 3.0 2.8 2.7 Percentage of GDP 1.7 1.5 1.5 1.5 1.4 1.4 1.3 1.3 (c) Other Accounts (i) Oil/Fertiliser/Food Bonds - Certain subsidy payments were made in the form of bonds ‘Other accounts’ includes sundry items like issued to oil marketing companies, fertilizers special deposits by retirement funds with the companies and Food Corporation of India in Central Government, securities issued in lieu of the past. These bonds are part of public account subsidies, money in postal insurance and annuity liability. Liabilities on account of these securities had increased significantly during funds, other deposits etc. The share of other items 2005-06 to 2008-09. Since 2009-10, all has been going down over the years, from 10.0 payments related to these subsidies are made per cent of total liabilities in 2006-07 to 5.7 per in cash. As a result, there has been a secular cent at end-March 2013 (Table 3.1). Some decline in these liabilities to 3.4 per cent of important items under this category are elaborated total liabilities at end-March 2013 from 6.5 below: per cent at end-March 2009 (Table 3.4). 2200Public Account Liabilities Table 3.4: Special Securities issued in lieu of Subsidies (` crore) Components Actuals Provisional Estimates RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 Special securities issued (in lieu of subsidy payment) 66934 94988 177580 187886 182123 172091 160296 160296 Percentage of Total Liabilities 3.2 4.1 6.5 5.9 5.2 4.2 3.4 3.0 (i) Securities issued to Oil Marketing Companies 50734 71288 133880 144186 144186 140186 134423 134423 Percentage of Total Liabilities 2.4 3.1 4.9 4.6 4.1 3.4 2.9 2.5 (ii) Food Corporation of India 16200 16200 16200 16200 16200 16200 16200 16200 Percentage of Total Liabilities 0.8 0.7 0.6 0.5 0.5 0.4 0.3 0.3 (iii) Fertiliser Companies 0.0 7500 27500 27500 21737 15705 9672 9672 Percentage of Total Liabilities 0.0 0.3 1.0 0.9 0.6 0.4 0.2 0.2 (ii) Postal Insurance – With a view to convert part (iii)Advances - Government occasionally makes of the frozen corpus of Post Office Life advances to public and quasi-public bodies and Insurance Fund (POLIF) and Rural Post Life to individuals, under special laws or for special Insurance Fund (RPOLIF) into dated securities, reasons. Under advances in the Public Account, the Government issued Special Securities to as on 31st March 2012, there is a balance of Directorate of Postal Life Insurance. Securities (-) ` 10,817crore which is mainly attributed to for ` 7,000 crore were issued in each of the Postal advance of (-) ` 9,797.99 crore and year 2010-11 and 2011-12 and ` 6,080 crore in 2012-13. The liabilities in public account have Telecommunication advance of (-) ` 325.63 been reduced and liabilities under public debt crore. The trends in outstanding advances in the increased accordingly. Public Account are shown in Table 3.5 below: Table 3.5: Advances (` crore) Provisional Components 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 1 2 3 4 5 6 7 Advances -3342 -4467 -9817 -8969 -5899 -10817 Percentage of Total Liabilities -0.2 -0.2 -0.4 -0.3 -0.2 -0.3 Percentage of GDP -0.1 -0.1 -0.2 -0.1 -0.1 -0.1 (d) Reserve Funds and Deposits Account include balance sheet reserves of commercial undertakings (e.g., Railways), Reserve Funds and deposits constituted 2.9 per cent of total liabilities as at end-March 2013, down from grants by other governments and public 3.2 per cent at end-March 2012 and noticeably subscriptions (e.g. relief funds), contributions lower than 6.2 per cent at end-March 2007. These made by outside agencies (e.g. ICAR) etc. liabilities can be interest bearing or non interest Interest-bearing reserves have become bearing. Interest bearing liabilities constituted 63.7 negligible due to draw down from railways per cent of total at end-March 2013 compared to (Table 3.6). Reserve funds not bearing interest 55.6 per cent at end-March 2012. A more detailed include National Calamity Contingency Fund, account is given below. Guarantee Redemption Fund, Central Road (i) Reserve Funds - Reserve Funds in the Public Fund, Railway Safety Fund etc. 2211Government Debt : Status Paper Table 3.6: Reserve Funds (` crore) Components Actuals Provisional Estimates RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 Reserve Funds 34452 44845 34248 20670 21617 27291 31474 37368 Percentage of Total Liabilities 1.6 1.9 1.2 0.7 0.6 0.7 0.7 0.7 (i) Interest bearing 16602 22348 15627 4848 474 2392 7634 15235 Percentage of Total Liabilities 0.8 1.0 0.6 0.2 0.0 0.1 0.2 0.3 (ii) Non-Interest bearing 17850 22497 18621 15822 21143 24899 23840 22133 Percentage of Total Liabilities 0.8 1.0 0.7 0.5 0.6 0.6 0.5 0.4 Share of interest-bearing funds to total (%) 48.2 49.8 45.6 23.5 2.2 8.8 24.3 40.8 (ii) Deposits - Deposits received by the 2012 to 75.8 per cent at end-March 2013. Government are reckoned in the public Contributions under Employees Family Pension Scheme, 1971 accounted for the major account. These deposits may be interest part of interest bearing deposits at ` 57,217 bearing or non-interest bearing. Deposit crore. Non-interest bearing deposits declined liabilities (as percentage of total liabilities) to 0.2 per cent of GDP at end-March 2013 from declined to 2.2 per cent at end-March 2013 0.4 per cent a year ago. These deposits largely from 2.6 per cent at end-March 2012 (Table consist of deposits with civil courts, with 3.7). Interest bearing liabilities went up from departments like defence, railway, post and 67.6 per cent of total deposits at end-March telecommunication etc. Table 3.7: Deposits-Interest Bearing and Not Interest Bearing (` crore) Components Actuals Provisional Estimates RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1 2 3 4 5 6 7 8 9 Deposits 96843 82198 94434 98783 107145 106586 102851 106149 Percentage of Total Liabilities 4.6 3.6 3.4 3.1 3.0 2.6 2.2 2.0 Bearing Interest 46104 50715 62757 68027 69948 72021 77964 84294 Percentage of Total Liabilities 2.2 2.2 2.3 2.2 2.0 1.7 1.7 1.6 Not Bearing Interest 50739 31483 31677 30756 37197 34565 24887 21855 Percentage of Total Liabilities 2.4 1.4 1.2 1.0 1.1 0.8 0.5 0.4 The share of public account liabilities in the total companies and FCI. Since 2009-10, all payments debt of the Government has declined from more related to such subsidies are made in cash. The than 20 per cent in 2006-07 to 12.9 per cent in share of NSSF and state provident funds in the total 2012-13. Decline was primarily due to ‘other liabilities of the Government has remained broadly accounts’ which mainly comprises of securities stable, while the share of reserve funds and deposits issued in lieu of subsidies to oil and fertilizers has seen a decline in the recent years. 22224 General Government Debt General government debt is the consolidated Financing of Fiscal Deficit – States debt of the Central Government and State The major sources of financing of the fiscal Governments. Central Government debt was deficit of the state governments are market covered in the previous chapters. This chapter gives borrowings, borrowings from NSSF, loans from a brief account of the debt profile of State financial institutions, and loans from the Centre. Governments, followed by a discussion of general State Governments also incur liabilities in the government debt. public accounts through provident funds, reserve 1. State Government Debt9 funds, deposit etc. The financing pattern of budget deficit of State Governments has undergone a shift The Constitution of India empowers State in composition over time. Market borrowings, at Governments to borrow only from domestic 75.4 per cent in 2011-12 have emerged as the major sources (Article 293(1)). Further, as long as a state source of financing. There is a corresponding has outstanding borrowings from the Central decline in borrowings from NSSF10 (-1.2 per cent Government, it is required to obtain Central in 2011-12) and loans from the Centre11 (3.6 per Government’s prior approval before incurring debt cent in 2011-12) (Table 4.1). (Article 293 (3)). Table 4.1: Financing of Gross Fiscal Deficit (` crore) Year Market Loans Special Loans State Reserve Deposits Other Cash Gross Borrowings from Securities from Provident Funds and Public drawdown Fiscal Centre issued to LIC, Funds, Advances Account Overall Deficit NSSF NABARD, etc. -Surplus(–)(GFD) NCDC, / Deficit (+) SBI and Other Banks 1 2 3 4 5 6 7 8 9 10 11 1999-00 12,660 12,180 26,420 3,380 17,880 2,560 9,050 2,850 3,130 90,100 2000-01 12,520 8,320 32,610 4,550 13,110 3,100 7,140 8,950 -2,380 87,920 2001-02 17,250 10,900 35,650 6,290 10,190 4,520 5,000 930 3,540 94,260 2002-03 28,480 -370 48,970 4,860 9,860 4,800 710 6,700 -4,290 99,730 2003-04 47,290 13,940 18,000 4,130 9,330 6,380 -370 22,470 -530 120,630 2004-05 34,560 -9,780 64,190 0 8,880 7,130 8,070 4,960 -10,230 107,770 2005-06 15,300 -40 73,820 4,060 10,460 5,230 7,260 7,940 -33,950 90,080 2006-07 13,080 -8,890 56,020 3,940 10,370 7,630 12,800 -1,120 -16,320 77,510 2007-08 53,920 -930 5,850 6,300 12,340 -5,920 13,580 3,720 -13,410 75,450 2008-09 104,040 -760 1,480 5,700 15,640 7,540 4,590 5,320 -8,960 134,590 2009-10 112,650 -1,700 24,160 8,210 23,140 -1,990 12,370 4,280 7,700 188,820 2010-11 88,780 710 38,630 3,200 27,810 2,610 22,860 -8,290 -14,850 161,460 2011-12 (RE) 156,710 7,540 -2,520 6,070 25,480 5,550 10,770 -8,870 7,140 207,880 2012-13 (BE) 177,160 11,390 1,280 8,460 23,150 6,260 4,340 -15,770 -1,010 215,270 Per cent of GFD 1999-00 14.1 13.5 29.3 3.8 19.8 2.8 10.0 3.2 3.5 100.0 2000-01 14.2 9.5 37.1 5.2 14.9 3.5 8.1 10.2 -2.7 100.0 2001-02 18.3 11.6 37.8 6.7 10.8 4.8 5.3 1.0 3.8 100.0 2002-03 28.6 -0.4 49.1 4.9 9.9 4.8 0.7 6.7 -4.3 100.0 2003-04 39.2 11.6 14.9 3.4 7.7 5.3 -0.3 18.6 -0.4 100.0 2004-05 32.1 -9.1 59.6 0.0 8.2 6.6 7.5 4.6 -9.5 100.0 2005-06 17.0 0.0 81.9 4.5 11.6 5.8 8.1 8.8 -37.7 100.0 2006-07 16.9 -11.5 72.3 5.1 13.4 9.8 16.5 -1.4 -21.1 100.0 2007-08 71.5 -1.2 7.8 8.3 16.4 -7.8 18.0 4.9 -17.8 100.0 2008-09 77.3 -0.6 1.1 4.2 11.6 5.6 3.4 4.0 -6.7 100.0 2009-10 59.7 -0.9 12.8 4.3 12.3 -1.1 6.6 2.3 4.1 100.0 2010-11 55.0 0.4 23.9 2.0 17.2 1.6 14.2 -5.1 -9.2 100.0 2011-12 (Prov) 75.4 3.6 -1.2 2.9 12.3 2.7 5.2 -4.3 3.4 100.0 2012-13 (RE) 82.3 5.3 0.6 3.9 10.8 2.9 2.0 -7.3 -0.5 100.0 Source: State Finances: A Study of Budgets of 2012-13; RBI 9 Data on State Governments’ finances is sourced from the RBI publication, State Finances: A Study of Budgets of 2012-13. 10 States’ borrowings from NSSF is largely a function of the level of small savings collections. To a lesser extent, it also depends on the prevailing ratio of sharing net small savings collections with the Central Government. 11 Central Government extends loans to State Governments under Article 293 (2) of the Constitution of India. Following the recommendations of the Twelfth Finance Commission, the loan component of the plan assistance to States has been done away with, leading to decline of loans from the Centre as a financing source for States. 2233Government Debt : Status Paper Liabilities of State Governments Total liability of state Governments increased to Consistent with the classifications of Central ` 20.0 trillion at end-March 2012 from ` 18.3 Government liabilities, State Government debt is trillion at end-March 2011. As a per cent of GDP, discussed under two broad categories viz., public debt however, it declined to 22.3 per cent from 23.5 per and other liabilities. The liability position of State cent over the same dates, in line with the declining Governments is presented in Table 4.2 while Table 4.3 presents the same information as a ratio to GDP. trend established over the years (Chart 4.1). Chart 4.1: Liabilities of the State Governments 35 30 25 20 15 10 5 0 Public Debt at end-March 2012, down from 27.0 per cent at previous year-end. The share of NSSF has been Public debt, at ` 14.7 trillion at end-March 2012, steadily decreasing over the years. Loans from the constituted 73.5 per cent of total liabilities of state Centre, which have also been decreasing over the governments (16.4 per cent of GDP). Its years, accounted for 7.6 per cent of total liabilities contribution to total liabilities has remained largely at end-March 2012 compared to 7.9 per cent at stable since 2006-07. Market loans (dated previous year-end. State governments also take securities) constituted 36.9 per cent of total negotiated loans from LIC, GIC, NABARD and liabilities at end-March 2012, up from 33.0 per cent other financial institutions. At end-March 2012, at end March 2011. This share has increased from these loans constituted 4.1 per cent of total 19.6 per cent at end-March 2007. Borrowings from liabilities down from 4.5 per cent at end-March NSSF accounted for 24.3 per cent of total liabilities 2011 (Table 4.2). Table 4.2 : Liability Position of State Governments (` crore) Components Actuals RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 1. Public Debt (a to f) 910510 969400 1077630 1216780 1340530 1473460 1663480 (a) Market Loans 242780 298510 401920 515790 604090 740170 917330 (b) Borrowings from NSSF 425310 430880 431920 455020 494640 486420 487700 (c) Loans from the Centre 146650 145100 143870 143150 144170 151710 163110 (d) Loans from Banks and other Financial Institutions 69340 71440 77780 83480 81720 81810 82090 (e) Power Bonds 26050 23140 21690 18780 14420 11540 8670 (f) Ways and Means Advances and others 380 330 450 560 1490 1810 4580 2244 PDG tnec reP 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (RE) 2013 (BE) Public Debt Other Liabilities Total LiabilitiesGeneral Government Debt (` crore) Components Actuals RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 2. Other Liabilities (a to d) 331070 358890 392560 431870 488440 530360 564260 (a) State Provident Funds 149920 161970 177430 200560 228240 253720 276870 (b) Reserve Funds 78760 78260 83930 94350 103170 108720 114980 (c) Deposits and Advances 101070 116590 128350 134530 153660 164430 168770 (d) Contingency Fund 1320 2070 2850 2430 3370 3490 3640 3. Total Liabilities (1+2) 1241580 1328290 1470190 1648650 1828970 2003820 2227740 percentage of total liabilities 1. Public Debt (a to f) 73.3 73.0 73.3 73.8 73.3 73.5 74.7 (a) Market Loans 19.6 22.5 27.3 31.3 33.0 36.9 41.2 (b) Borrowings from NSSF 34.3 32.4 29.4 27.6 27.0 24.3 21.9 (c) Loans from the Centre 11.8 10.9 9.8 8.7 7.9 7.6 7.3 (d) Loans from Banks and other Financial Institutions 5.6 5.4 5.3 5.1 4.5 4.1 3.7 (e) Power Bonds 2.1 1.7 1.5 1.1 0.8 0.6 0.4 (f) Ways and Means Advances and others 0.0 0.0 0.0 0.0 0.1 0.1 0.2 2. Other Liabilities (a to d) 26.7 27.0 26.7 26.2 26.7 26.5 25.3 (a) State Provident Funds 12.1 12.2 12.1 12.2 12.5 12.7 12.4 (b) Reserve Funds 6.3 5.9 5.7 5.7 5.6 5.4 5.2 (c) Deposits and Advances 8.1 8.8 8.7 8.2 8.4 8.2 7.6 (d) Contingency Fund 0.1 0.2 0.2 0.1 0.2 0.2 0.2 3. Total Liabilities (1+2) 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Various components of liabilities of State per cent of GDP have shown increasing trend in Governments as per cent of GDP are given in Table line with greater recourse to market by the States 4.3. While overall debt-GDP ratio of States has to finance their deficit (Table 4.3). been declining over the years, market loans as Table 4.3 : Liability Position of State Governments (% to GDP) Components Actuals RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 1. Public Debt (a to f) 21.2 19.4 19.1 18.8 17.2 16.4 16.6 (a) Market Loans 5.7 6.0 7.1 8.0 7.7 8.2 9.2 (b) Borrowings from NSSF 9.9 8.6 7.7 7.0 6.3 5.4 4.9 (c) Loans from the Centre 3.4 2.9 2.6 2.2 1.8 1.7 1.6 (d) Loans from Banks and other Financial Institutions 1.6 1.4 1.4 1.3 1.0 0.9 0.8 (e) Power Bonds 0.6 0.5 0.4 0.3 0.2 0.1 0.1 (f) Ways and Means Advances and others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2. Other Liabilities (a to d) 7.7 7.2 7.0 6.7 6.3 5.9 5.6 (a) State Provident Funds 3.5 3.2 3.2 3.1 2.9 2.8 2.8 (b) Reserve Funds 1.8 1.6 1.5 1.5 1.3 1.2 1.1 (c) Deposits and Advances 2.4 2.3 2.3 2.1 2.0 1.8 1.7 (d) Contingency Fund 0.0 0.0 0.1 0.0 0.0 0.0 0.0 3. Total Liabilities (1+2) 28.9 26.6 26.1 25.5 23.5 22.3 22.2 2255Government Debt : Status Paper Other Liabilities liabilities is State Provident Funds at 47.8 per cent of other liabilities (12.7 per cent of total liabilities) Other liabilities of State governments stood at ` 5.3 trillion at end-March 2012 compared to at end-March 2012. Deposits and advances and ` 4.9 trillion at end-March 2011. Relative to GDP, reserve funds are the other components however, there is a reduction over the same period accounting for 31.0 per cent and 20.5 per cent, from 6.3 per cent to 5.9 per cent. They constituted respectively, of other liabilities at end-March 26.5 per cent of total liabilities as at end-March 2012. Contingency fund constituted 0.7 per cent 2012, a share that has remained more or less stable of other liabilities at end-March 2012 over the years. The major constituent of other (Table 4.4). Table 4.4 : Composition of Other Liabilities of State Governments (% of other Liability) Components Actuals RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 (i) State Provident Funds 45.3 45.1 45.2 46.4 46.7 47.8 49.1 (ii)Reserve Funds 23.8 21.8 21.4 21.8 21.1 20.5 20.4 (iii) Deposits and Advances 30.5 32.5 32.7 31.2 31.5 31.0 29.9 (iv) Contingency Fund 0.4 0.6 0.7 0.6 0.7 0.7 0.6 Other Liabilities (i to iv) 100 100 100 100 100 100 100 State Governments as a group maintain a large Governments could have been lower at 21.0 per cash surplus on a consistent basis while at the same cent of GDP against 22.3 per cent without time running a budget deficit. This appears to be a adjustment (Table 4.5) This factor, however, does case of over-borrowing by States. There could be not affect consolidated general government debt scope for State Governments to curtail their as investment in treasury bills by States is an inter- borrowings by running down their cash surplus government transaction that is netted out of (parked as investment in treasury bills of the consolidated general government debt position. Central Government). An adjustment made to this effect indicates that total liabilities of State Table 4.5 : State Government Debt Adjusted for Investment in Treasury Bills (` crore) Components Actuals RE BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 1. Public Debt 910510 969400 1077630 1216780 1340530 1473460 1663480 percentage of GDP 21.2 19.4 19.1 18.8 17.2 16.4 16.6 2. Investment in Treasury Bills of Centre 73410 96970 100900 92810 110690 118600 146636 3. Public Debt net of Investment T-Bills (1-2) 837100 872430 976730 1123970 1229840 1354860 1516844 percentage of GDP 19.5 17.5 17.3 17.4 15.8 15.1 15.1 4. Other Liabilities 331070 358890 392560 431870 488440 530360 564260 percentage of GDP 7.7 7.2 7.0 6.7 6.3 5.9 5.6 5. Total Debt (1+4) 1241580 1328290 1470190 1648650 1828970 2003820 2227740 percentage of GDP 28.9 26.6 26.1 25.5 23.5 22.3 22.2 6. Total Adjusted Debt (3+4) 1168170 1231320 1369290 1555840 1718280 1885220 2081104 percentage of GDP 27.2 24.7 24.3 24.0 22.0 21.0 20.8 2266General Government Debt 2. General Government Debt (ii) Centre’s loans to States. General government liabilities are arrived at After making these adjustments, consolidated by consolidating liabilities of the Central ‘public debt’ of the general government works out Government and State Governments. As was done to 52.9 per cent of GDP at end-March 2012, higher for liabilities of the Centre and States, general than 51.8 per cent at end-March 2011. On government liabilities are also discussed in terms corresponding dates, general government ‘other of two broad components viz., public debt and other liabilities’ constituted 12.6 per cent and 13.7 per liabilities. As general government debt represents cent of GDP. Total liabilities of the general the liability of the government sector to the ‘rest-of-the-world’, the following inter-government government at end-March 2012 amounted to 65.5 transactions are netted out while consolidating per cent of GDP, unchanged from its level a year general government debt. ago (Table 4.6). General government debt-GDP (i) Investment of State Governments in bills issued ratio is estimated to increase marginally to 66.0 by the Central Government; per cent at end-March 2013. Table 4.6 : General Government Liabilities (` crore) Components Actuals Prov. BE 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 1. Public Debt Centre 1691908 1847891 2203836 2583616 2954700 3539519 4066606 percentage of GDP 39.4 37.1 39.1 39.9 37.9 39.4 40.6 2. Public Debt States 910510 969400 1077630 1216780 1340530 1473460 1663480 percentage of GDP 21.2 19.4 19.1 18.8 17.2 16.4 16.6 3. States Investment in Treasury Bills of Centre 73410 96970 100900 92810 110690 118600 146636 percentage of GDP 1.7 1.9 1.8 1.4 1.4 1.3 1.5 4. Loans from Centre to States 146653 145098 143870 143152 144170 143548 146280 percentage of GDP 3.4 2.9 2.6 2.2 1.8 1.6 1.5 5. General Government Public Debt (1+2-3-4) 2382356 2575223 3036696 3564433 4040370 4750831 5437171 percentage of GDP 55.5 51.6 53.9 55.0 51.8 52.9 54.3 6. Other Liabilities Centre 430133 458143 547527 576068 579249 599265 615492 percentage of GDP 10.0 9.2 9.7 8.9 7.4 6.7 6.1 7. Other Liabilities States 331070 358890 392560 431870 488440 530360 564260 percentage of GDP 7.7 7.2 7.0 6.7 6.3 5.9 5.6 8. General Government Other Liabilities (6+7) 761203 817033 940087 1007938 1067689 1129625 1179752 percentage of GDP 17.7 16.4 16.7 15.6 13.7 12.6 11.8 9. General Government Total Liabilities (5+8) 3143559 3392257 3976783 4572371 5108060 5880457 6616922 percentage of GDP 73.2 68.0 70.6 70.6 65.5 65.5 66.0 Note:- 1. States data relate to revised estimates for 2011-12 and budget estimates for 2012-13. 2. Data on States’ Investment in Treasury Bills of Centre for 2012-13 is taken from RBI. 2277Government Debt : Status Paper General government liabilities have been declining market borrowings by both the Central and State in recent years (Chart 4.2). Share of public debt in governments and relatively subdued small savings total liabilities has increased over time with collections. In addition, the Central Government commensurate decline in share of other liabilities. has discontinued the practice of issuing special At end-March 2013, public debt represented 82.2 bonds to oil companies, fertilizers companies etc., per cent of total liabilities as against 75.8 per cent which formed a part of other liabilities of the at end-March 2007. The decline in share of other Central Government. liabilities is attributable to greater reliance on Chart 4.2: Trends in General Government Liabilities 80 84 70 82 60 P 80 GD 50 nt ent of 34 00 78 Per ce Per c 20 76 74 10 0 72 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 RE Public Debt Other Liabilities Total Liabilities Public Debt % Toal Liabilities (right scale) In brief, the State Governments’ debt-GDP increased while the borrowings from NSSF have ratio declined to 22.3 per cent at end-March 2013 declined significantly. Taking the Central and State from 23.5 per cent a year ago. The share of public Governments together, the general government debt and other liabilities within the overall debt liabilities have been declining in recent years. portfolio of the State Governments have remained Share of public debt in total liabilities has increased broadly unchanged over time. Within the public over time with commensurate decline in share of debt, however, the share of market borrowings has other liabilities. 22885 Assessment, Emerging Issues and Road Ahead This chapter provides an assessment of the debt of the liabilities for both the Centre and States. profile of the Government in terms of cost and risk Short-term Debt characteristics. Debt sustainability is largely a Central Government function of the level of debt. At the same time, the risk profile of debt stock, by virtue of its impact Short-term debt13 of the Central Government on the ability to borrow, has important on residual maturity basis includes 14 day treasury consequences for debt sustainability. The risk bills, regular treasury bills, dated securities profile of India’s Government debt stands out as maturing in the ensuing one year and external debt safe and prudent in terms of accepted parameters. with remaining maturity of less than one year. Short-term debt declined noticeably during the first 1. Maturity of Debt half of 2000s with its share in public debt declining Information regarding residual maturity is not to a low of 6.2 per cent in 2003-04. It, however, readily available on the entire debt portfolio of the rose consistently thereafter and stood at 13.3 per Government, particularly regarding liabilities under cent of total public debt and 5.3 per cent of GDP at public account. Maturity analysis of debt in this end-March 2012. It is estimated to decline Chapter is confined to the ‘public debt’12 component marginally at end-March 2013 (Table 5.1) Table 5.1: Short-term Debt of the Central Government Year Amount Per cent of Per cent of (` Crore) Public Debt GDP 1 2 3 4 2000-01 159,726 16.1 7.37 2001-02 180,649 16.2 7.69 2002-03 161,379 13.3 6.38 2003-04 81,987 6.2 2.89 2004-05 91,720 6.5 2.83 2005-06 138,454 8.9 3.75 2006-07 166,270 9.8 3.87 2007-08 194,964 10.6 3.91 2008-09 304,253 13.8 5.40 2009-10 354,117 13.7 5.47 2010-11 325,683 11.0 4.18 2011-12 471,727 13.3 5.26 2012-13 RE 522,675 12.9 5.22 12 Maturity profile is available for marketable debt, external debt and 14-day ITBs, which together account for more than 90 per cent of public debt. Of the remaining items, securities issued to NSSF and securities issued to international financial institutions are not significant from a rollover risk perspective. Compensation bonds, at 0.4 per cent of public debt at end March, 2013, is too low to affect the conclusions. 13 Short-term debt is defined as debt with maturity of one year or less. Total short-term debt is, thus, the sum of outstanding treasury bills at end-March and repayments of dated securities due in the ensuing financial year. 29Government Debt : Status Paper Composition of short-term debt indicates short-term debt at end-March 2013. Share of that treasury bills account for 78.6 per cent while short-term external debt, was relatively dated securities constituted 18.2 per cent of total insignificant (Chart 5.1). Chart 5.1: Composition of Short-Term Debt of the Centre 100 90 80 70 60 50 40 30 20 10 0 As treasury bills are necessary for development barring 2009-10 when it reached 1.7 per cent of of money markets and as their stock is by no means GDP due to de-sequestering of MSS securities. At excessive, it would be more pertinent to focus on end-March 2013, dated securities maturing within dated securities with residual maturity of less than a year amounted to 0.9 per cent of GDP, 2.3 per one year. Short-term dated securities remained cent of public debt, and 3.1 per cent of total around one per cent of GDP during the 2000s, outstanding dated securities (Chart 5.2). State Governments Short-term debt of State Governments is relatively part of public debt of States’ Governments, and as low, constituting 6.1 per cent of their public debt States largely issue securities with 10-year (Table 5.2). State Governments do not issue bills. maturity14, short-term debt has been relatively low Besides, as market loans constitutes the dominant under market loans. 14 Since 2012-13, States’ Governments have been allowed to issued securities with shorter maturities of 4-5 years and also re-issue existing securities. 30 tbeD mreT-trohS latoT fo tnec reP 10-0002 20-1002 30-2002 40-3002 50-4002 60-5002 70-6002 80-7002 90-8002 01-9002 11-0102 21-1102 31-2102 ER T-bills 14 DTBs Dated Securties Ext. Debt Chart 5.2: Short-Term Debt under Dated Securities of the Centre 7 6 5 4 3 2 1 0 tnec reP 10-0002 20-1002 30-2002 40-3002 50-4002 60-5002 70-6002 80-7002 90-8002 01-9002 11-0102 21-1102 31-2102 ER Per cent of Public Debt Per cent of Oustanding Dated Securities Per cent of GDPAssessment, Emerging Issues and Road Ahead Table 5.2: Short-term Debt of the States’ Governments Year Amount Per cent of Per cent of (` Crore) Public Debt GDP 1 2 3 4 2000-01 24,381 5.8 1.12 2001-02 30,927 6.3 1.32 2002-03 31,016 5.4 1.23 2003-04 38,001 5.7 1.34 2004-05 36,130 4.8 1.11 2005-06 43,217 5.1 1.17 2006-07 40,207 4.4 0.94 2007-08 44,776 4.6 0.90 2008-09 65,631 6.1 1.17 2009-10 65,693 5.4 1.01 2010-11 75,861 5.7 0.97 2011-12 89,257 6.1 0.99 Note:- Short-term debt other than WMA from RBI is estimated from repayment schedule net of debt swap scheme related repayments. Over the years, there is a shift in composition at end-March 2002, but tapered off to 1.9 per cent of short-term debt of state governments. A major at end-March 2012. Similarly short-term change is the reduction in WMA15 from RBI which component of loans from the Centre (on residual constituted 30.4 per cent of short-term public debt maturity basis) also declined (Chart 5.3). Chart 5.3: Composition of Short-Term Debt of States 100 90 80 70 60 50 40 30 20 10 0 General Government Short-term public debt of the general 9.1 per cent of total public debt compared with government16 has remained below 10 per cent of 6.9 per cent at end-March 2011 and 5.2 per cent at total debt. It has, however, been increasing in the end-March 2007 (Table 5.3). last 5 to 6 years. At end-March 2012, it represented 15 Ways and Means Advances, (WMA) is line of credit from RBI. 16 Intergovernmental debt such as treasury bills held be State Governments are netted out. 31 tbeD mreT-trohS latoT fo tnec reP 10-0002 20-1002 30-2002 40-3002 50-4002 60-5002 70-6002 80-7002 90-8002 01-9002 11-0102 21-1102 WMA from RBI Internal debt other than Mkt Loans Loans from Centre Market LoansGovernment Debt : Status Paper Table 5.3: Short-term Debt of General Government Year (` Crore) Per cent of Public Debt Per cent of GDP 2006-07 124,879 5.2 2.9 2007-08 134,498 5.2 2.7 2008-09 260,432 8.6 4.6 2009-10 317,790 8.9 4.9 2010-11 279,607 6.9 3.6 2011-12 432,966 9.1 4.8 Short-term debt under market loans17 has under market loans represented 3.6 per cent of remained stable for the general government during general government public debt and 1.9 per cent the recent past, barring 2009-10 when it saw some of GDP (Chart 5.4). increase. At end-March 2012, short-term debt Chart 5.4: Short-term Debt of General Government Under Market Loans 5 4 3 2 1 0 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 Annual Repayment Burden of Dated Securities ARB is visible during 2014-15 to 2017-18 both in absolute terms as well as relative to GDP. During The Annual Repayment Burden (ARB) of dated these years, ARB is more than 1.3 per cent of GDP securities is shown in Chart 5.5 (actual repayments as compared with about 1 per cent historically. for years up to 2012-13 and position as at end- March 2013 for later years). A steep increase in 17 Includes market loans as well as other items in internal debt, in case of States’ Governments. 32 tnec reP % Public Debt % of GDP Chart 5.5: Maturity Profile of Central Government Dated Securities 300000 250000 200000 150000 100000 50000 0 erorC ` 20-1002 40-3002 60-5002 80-7002 01-9002 21-1102 41-3102 61-5102 81-7102 02-9102 22-1202 42-3202 62-5202 82-7202 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 PDG fo tnec reP 300000 Maturity amount Maturity amount as % GDP (right scale) `Assessment, Emerging Issues and Road Ahead These near-term repayments need to be planned provided for buyback/switches of ` 50,000 crore to in advance to control refinancing risk. This smoothen the redemption profile. Such buybacks/ underscores the need for active debt management switches help in managing rollover risk through a (Box 5.1) to even out redemption burden over a temporal smoothening of repayment obligations and longer time frame. The Union Budget 2013-14 has do not lead to net supply of securities. Box 5.1 Active Debt Management At present, debt management operations in India largely pertain to pre-issuance and issuance operations. Post-issuance market operations like buyback of securities and active debt restructuring are not predominant in the Indian context, although they have been resorted to on a few occasions. Active operations by a debt manager could be undertaken with the following objectives:- a. Consolidation of securities: Buying back of illiquid securities and reissuing liquid securities to augment stock with the objective of enhancing liquidity in benchmark securities. b. Debt restructuring: These operations are conducted to restructure the maturity profile of outstanding stock to manage rollover/refinancing risk or smooth the redemption profile. c. Management of Government’ Cash Surplus: When the Government runs surpluses, the same could be used to buyback securities maturing in the short run (generally within the same fiscal year) from the market to reduce interest cost. Surplus funds can also be used to reduce bunched redemption obligations in the near term. d.Market Management Mechanism: Under extreme conditions of excess/shortfall in demand in a particular stock or maturity segment, debt managers may buy/sell securities or even lend securities with a view to stabilize the debt markets. These operations may also be aimed at promoting the primary dealer (PD) system. Impact on Fisc: Conceptually, in the case of a Government running fiscal deficits, switches/buybacks are funded by fresh borrowing. They do not affect, except to the extent discussed later in this para, either the fiscal deficit or debt stock. As coupon rates on repurchased securities are likely to be different from market yields at the time of buyback, Government is likely to either receive a premium or pay a discount while purchasing the securities. Depending on current yields, government could either receive a net income or incur a net expenditure in the transaction. Fiscal deficit will be affected to that extent. Also, a budget provision is required to be made to enable payment of the gross amount of discount paid as well as for the face value of securities to be repurchased. In case the debt manager lends securities to PDs for market management, the Government is likely to earn interest/fee. 2. Floating Rate Debt rates, linked to LIBOR. At end-March 2013, such Government debt is predominantly at fixed external debt stood at ` 92,503 crore, constituted coupon rates. State governments do not issue any 2.3 per cent of public debt and 0.9 per cent of floating rate debt, while Central Government GDP. Taking both components together, total issues a small amount. At end-March 2013 floating rate debt works out to be 1.4 per cent of outstanding floating rate debt issued domestically GDP at end-March 2013. Share of floating rate amounted to ` 50,350 crore constituting 1.2 per debt in Central Government public debt was 3.5 cent of public debt and 0.5 per cent of GDP (Table per cent, while it represented 2.6 per cent of the 5.4). A part of external debt is also at floating general government public debt. 33Government Debt : Status Paper Table 5.4: Floating Debt of the Central Government Internal Floating Debt External Floating Debt Total Floating Debt Year Per cent of Per cent of Per cent of Per cent of Per cent of Per cent of Public Debt GDP Public Debt GDP Public Debt GDP 2001-02 0.3 0.1 3.7 1.7 3.9 1.9 2002-03 0.2 0.1 2.2 1.1 2.5 1.2 2003-04 1.0 0.5 1.4 0.7 2.4 1.1 2004-05 2.5 1.1 1.6 0.7 4.1 1.8 2005-06 2.3 1.0 1.8 0.8 4.1 1.7 2006-07 2.1 0.8 2.0 0.8 4.1 1.6 2007-08 1.9 0.7 2.0 0.7 3.9 1.5 2008-09 1.6 0.6 2.5 1.0 4.1 1.6 2009-10 1.6 0.6 2.1 0.8 3.7 1.5 2010-11 1.5 0.6 2.4 0.9 3.8 1.4 2011-12 1.6 0.6 2.4 0.9 3.9 1.6 2012-13 RE 1.2 0.5 2.3 0.9 3.5 1.4 The low share of floating rate debt insulates related instrument is the Inflation Indexed Bond the debt portfolio from interest rate volatility. This (IIB) which has a fixed real rate of interest but imparts stability to the budget. Nevertheless, for whose nominal interest payments vary with development of the government securities market inflation (Box 5.2). Subsequent to the and given the Government’s responsibility to announcement made in the Union Budget provide investors with a diversified range of risk 2013-14 regarding the introduction of inflation free instruments, it may be desirable to maintain a protected instruments, the Government began regular supply of floating rate instruments. A issuing such bonds in June 2013. Box 5.2: Inflation Indexed Bonds An Inflation Indexed Bond (called variously as Real Return Bond or Inflation Linked Bond or Inflation Protected Bond or ‘Linker’, in short) is a bond that pays a constant real rate of interest, i.e., its coupon rate denotes the real interest rate. The principal is linked to a published inflation rate and accordingly, the principal goes up or down depending on whether inflation rate increases or decreases. Coupon payments are made by applying the real coupon rate to the indexed principal. Because coupon payments increase (or decrease) in proportion with the inflation rate, they are protected from inflation. At the time of repayment, the indexed value of the principal is redeemed to the bondholder, thereby protecting the principal from inflation. Thus, from an investor perspective, IIBs provides protection against inflation. From the perspective of the issuer or Government, IIBs may reduce borrowing cost by removing the uncertainty premium for inflation. Many long-term investors, such as pension funds and insurance companies, have inherent preference for instruments providing protection against inflation. Therefore, IIBs may strengthen demand for Government securities and broaden its investor base, which in turn should lead to reduction in cost of borrowings. IIBs may, in addition, have a stabilising impact on the budget, as interest burden increases (decreases) during periods of high (low) inflation which is also associated with higher (lower) tax revenues. IIBs provide an estimate of inflation expectation, and provide diversification to the debt manager. At the same time IIBs may be associated with certain drawbacks. Since indexation eases the pain of inflation, excessive indexation, by increasing tolerance for inflation, might lead to a rise in inflation to destabilising levels. Moreover there could be a long term rise in inflation in the economy. Future cash flows in case of IIBs are large and uncertain, adding to the complexity of debt and cash management. IIBs, as they shift the real burden of debt into the future, might create an incentive to over-borrow. 34Assessment, Emerging Issues and Road Ahead A moot issue is whether IIBs are more or less expensive than nominal bonds. A study in the US (Gong and Remolina, 1996) estimated that Government would have saved about 20 per cent of the borrowing cost by issuing indexed bonds of 10 years during 1984 to 1996. An ex post comparison of cost of indexed bonds vis-à-vis nominal bonds in the USA (Sack and Elsasser, 2004) suggested that, based on inflation through mid-2003, IIBs had cost the Treasury nearly $3 billion more. Roush (2008) found that the majority of the IIB issues since 2004 have yielded net savings for the Treasury. Dudley, Roush, and Ezer (2009), however, concluded that ex post analysis of cost of inflation linked bonds based on shorter time period may not be appropriate evaluation of these bonds. IIBs in UK were estimated to have saved the government £120 (sterling) million between 1998 and 2004. Many nations – all G-7 countries, other European countries like Greece, Poland, Sweden, Spain and Turkey, LatAm countries like Argentina, Brazil, Chile, Colombia and Mexico, Asian countries like Israel, Korea, Hong Kong and Thailand, as well as Australia and New Zealand, South Africa etc - issue inflation-linked bonds. References Wrase. Jeffery M. (1997); Inflation Indexed Bonds: How do they Work, Business Review, July/ August; Federal Reserve Bank of Philadelphia Gong, Frank F. and Eli M. Remolina (1996); Inflation Risk in the US Yield Curve: The Usefulness of Indexed Bonds; Research Paper No.9637 (November); Federal Bank of New York. Sack, B., and R. Elsasser (2004). “Treasury Inflation-Indexed Debt: A Review of the U.S. Experience.” Federal Reserve Bank of New York Economic Policy Review 10, no. 1 (May): 47-63. Roush, J. E. (2008). “The ‘Growing Pains’ of TIPS Issuance.” Board of Governors of the Federal Reserve System Finance and Economics Discussion Series, no. 2008-08, February. Dudley, William C., Jennifer Roush, and Michelle Steinberg Ezer (2009). The Case for TIPS: An Examination of the Costs and Benefits; Federal Reserve Bank of New York Economic Policy Review; July. Chart 5.6: External Debt of the Government 20 18 16 14 12 10 8 6 4 2 0 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 RE 35 tnec reP 3. Origin of Debt – Domestic and from 10.8 per cent of general government debt at External end-March 2002 to 5.0 per cent at end-March 2013. As discussed earlier in the chapter on public As per cent of GDP, external debt declined to 3.3 debt, government debt in India is raised from a per cent from 8.5 per cent over the same period predominantly domestic investor base. The share (Chart 5.6). The low share of external debt insulates of external debt has also seen a secular decline, the debt portfolio from currency risk. % of Centre Public Debt % of Centre Total Debt % of Combined Debt % of GDPGovernment Debt : Status Paper In the recent past, interest rates in the implication on the country’s ability to borrow. international financial markets have been very low. The decision to issue foreign currency In this backdrop there have been suggestions that denominated sovereign bonds cannot be based on it may be beneficial for the Government to borrow relative cost alone (results of study by an intern on from international financial market. Apart from costs of sovereign external borrowing are presented increasing the accessible pool of savings for the in Box 5.3). The need for a government to access economy, issuing bonds in international financial international capital markets should be justified in markets will broaden the investor base for the context of overall savings and investment Government borrowings. Sovereign bonds issued requirements of the economy. If a government in the international financial markets will also serve decides to issue sovereign bonds, it would require as benchmarks for the Indian corporate sector establishing a regular and predictable schedule of borrowings abroad and help stabilize their interest cost. There are, of course, certain risks. Apart from issuance leading to a build up of interest and currency risk, government will also be exposed to redemption payments. Therefore, the balance of volatility in global capital markets. Any adverse payments (BoP) implications of external borrowing event in international financial markets may have should also be clearly appreciated. Box 5.3 : Comparative Cost of External and Domestic Borrowings Cost Structure of External Debt It has been argued that India should borrow more in international capital markets as it is cheaper in comparison to borrowings from internal sources. Is there a case for Government of India borrowing in international capital markets? This is evaluated by deriving the effective hypothetical costs – (i) on an un-hedged basis, and (ii) on a hedged basis - had India borrowed fixed-rate 5-year US Dollars in each month over the time period 2007-12. A longer time period is taken because Government, being a sovereign borrower should access markets only on a regular and predictable basis, rather than opportunistically. Un-hedged cost of external debt The unhedged cost of external debt is the 5-year USD borrowing cost for India plus the rate of Rupee depreciation. The 5-year fixed-rate USD borrowing cost in turn is equal to the benchmark 5-year US Treasury borrowing cost plus the credit spread for India. Cost of external debt = GOI (=UST + Credit ) + Rupee Depreciation $, 5yr 5yr BBB- For India, the historical annual average rupee depreciation vis-à-vis Dollar for 20 years time period till June’ 12 is 3.94 per cent, rounded off to 4 per cent for the study. The cost of external bond issuance vis-à-vis domestic 5-year bond yield is shown in the graph below. Un-hedged Cost of External Borrowing 36Assessment, Emerging Issues and Road Ahead Before July 2010, internal debt was the cheaper option, whereas afterwards external debt is cheaper. On an annual average basis, the external debt has been more expensive with an average rate of 8.62 per cent as opposed to the domestic borrowing rate of 7.74 per cent. Hedged cost of external debt It is assumed that government chooses to lock/fix the exchange rate at a particular level, i.e. it chooses to hedge against the currency risk by undertaking a “currency swap”. The cost of borrowing for Government of India on fixed-rate 5 year USD bonds in international capital markets can be stated as below: GOI* = UST + Credit + Swap Cost $, 5yr 5 yr BBB- The relative cost of external borrowing (on a hedged basis) vis-à-vis domestic borrowing is shown in the graph below: From the above graph it is observed that the cost of external borrowings relative to internal borrowings hasn’t shown any clear trend in the last 5 years. There are periods of low costs for external debt, as well as relatively higher costs of external debt. From 2008 onwards, external debt showed some decline in cost. External debt does seem to be the cheaper alternative in the recent period (2011-12), but over the 5 years, on an average, hedged cost of external debt at 7.82 per cent is by and large similar to cost of domestic debt at 7.74 per cent. Volatility (standard deviation) is more for the external debt (0.94) as compared to internal debt (0.56). The average cost (from 8.62 per cent to 7.82 per cent) and volatility (from 1.6 to 0.94) improve if the government opts to hedge its external debt. 4. Ownership Pattern increased (Chart 5.7). Since insurance and Historically, commercial banks have been the provident funds are long-term investors, a secular predominant investor category in Government increase in their share complements securities. Over time, while remaining the largest Government’s endeavour to lengthen the maturity investor class, their share has declined, while the profile of its debt portfolio without undue pressure shares of insurance and provident funds have on yields. 37Government Debt : Status Paper Chart 5.7: Ownership Pattern of Central Government Securities 100% 80% 60% 40% 20% 0% Source: Handbook of Statistics on Indian Economy; RBI At end-March 2013, share of commercial banks share of FIIs has increased consistently and it stood at 46.7 per cent compared with 61.0 per cent represented 1.1 per cent of total government at end-March 2001. Over the same period, the share securities at end-March 2013 (Chart 5.8). The of insurance companies increased from 18.3 per largely domestic and institutional investor profile cent to 21.3 per cent and of provident funds from contributes to stable demand for government 3.3 per cent to 7.2 per cent. In recent years, the securities. 38 latoT fo tnec reP 1991 2991 3991 4991 5991 6991 7991 8991 9991 0002 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 RBI Commercial Banks Insurance Companies Provident Funds PDs Others Chart 5.8: Holding Pattern of Government Securities (March 13: outer ring; March-12: inner ring) Commercial Banks Bank- PDs 6.12 Non-Bank PDs 5.07 16.99 Insurance Companies 14.41 34.50 36.28 Mutual Funds 7.45 Co-operative Banks 7.37 0.88 1.38 Financial Institutions 2.98 1.61 Corporates 1.14 2.81 21.08 9.83 FIIs 9.36 Provident Funds 18.56 RBI OthersAssessment, Emerging Issues and Road Ahead 5. Sustainability Indicators of Debt term sustainability of the public debt. The level of Traditionally debt sustainability is assessed in debt reflects the cumulative effect of Government terms of primary deficit and interest cost, relative borrowings over time, which tends to be higher to nominal GDP growth rate. There is little for a developing economy due to the need for consensus with regard to a level of debt that may creating adequate infrastructure. India’s debt level be considered unsustainable. There are instances went up consistently during 1980s and 1990s and of countries with debt/GDP ratios close to or higher the combined debt-GDP ratio of the Centre and than 100 per cent without doubts on their ability States reached a peak of 83.3 per cent by the end to service debt. A secularly rising debt/GDP ratio of 2003-04. Thereafter, debt-GDP ratio has shown can nonetheless be considered as leading towards a secular decline. The marginal increase during un-sustainability. Symmetrically, a secularly falling 2008-09 was mainly on account of global factors debt/GDP ratio can be considered as leading (Chart 5.9). General government debt/GDP ratio towards stability. In this chapter, assessment of the stood at 66.0 per cent at end-March 2013 compared sustainability of public debt is made using trends to 65.5 per cent at end-March 2012. Reduction in observed in critical variables. debt took place at both the Central and State level. Level of Debt The ratio stood at 46.7 per cent for the Central The trend in level of debt is the first such Government and 22.2 per cent for state indicator which points toward long and medium- governments. Chart 5.9: Trends in Debt-GDP Ratio of the Government 90 80 70 60 50 40 30 20 10 0 2001-022002-03 2003-04 2004-05 2005-06 2006-072007-08 2008-09 2009-10 2010-11 2011-122012-13 RE The debt-GDP ratio is likely to continue to Interest Payments trend downward in the years ahead. The estimates The interest cost of debt is another crucial indicator for debt GDP-ratio upto 2015-16 for the Central of the sustainability of Government debt. The ratio Government provided in the Medium Term Fiscal of interest payments to revenue receipts (IP/RR) Policy Statement underscores the commitment to shows a secular decline for both the Central and sustainable debt trajectory (Table 5.5). State governments (Chart 5.10), notwithstanding Table 5.5 : Debt-GDP Ratio of the Centre the marginal increase in recent years due to (per cent) increased borrowings requirements post-financial crisis of 2008-09. Estimates 2012-13 2013-14 2014-15 2015-16 MTFP 45.9 45.7 44.3 42.3 Kelkar Committee 46.1 44.9 42.9 - 39 PDG fo tnec reP Centre States CombinedGovernment Debt : Status Paper Chart 5.10: Interest Payments to Revenue Receipts Ratio 60 50 40 t n e c 30 r e P 20 10 0 1 2 3 4 5 6 7 8 9 0 1 2 E 0 0 0 0 0 0 0 0 0 1 1 1 R 0- 1- 2- 3- 4- 5- 6- 7- 8- 9- 0- 1- 3 0 0 0 0 0 0 0 0 0 0 1 1 1 20 20 20 20 20 20 20 20 20 20 20 20 12- 0 Centre States Combined 2 Centre’s IP/RR was placed at 36.3 per cent Centre and States showed a downward movement 2012-13 as compared with 37.5 per cent in 2009- over 2000s. Centre’s AIC declined to 6.4 per cent 10 and 53.4 per cent in 2001-02. Similarly, States in 2012-13 from 8.1 per cent in 2000-01, while IP/RR ratio declined to 12.2 per cent in 2011-12 states’ AIC declined to 7.3 per cent from 9.2 per from 24.7 per cent in 2001-02. Combined IP/RR cent over the same period (Chart 5.11). of Centre and States in 2012-13 was placed at 23.1 A comparison of AIC with nominal GDP growth per cent compared to 37.2 per cent in 2001-02. rate reinforces the sustainability of public debt. Average Interest Cost Nominal growth rate in GDP has been well above Average interest cost (AIC) is arrived at by dividing the average interest cost, implying that the growth interest payments during a year with average debt in revenue generation through GDP is likely to stock18. A continuously declining average interest exceed the growth in interest obligations. This is cost augurs well for the stability of government likely to further push down the IP/RR ratio providing debt. Trend in average interest cost of both the more fiscal space for developmental expenditure. Chart 5.11: Average Interest Cost (AIC) and Nominal GDP Growth 10 25 %) 9 20h ( wt cent 8 15 P gro er 7 10GD P al n 6 5 mi o N 5 0 1 2 3 4 5 6 7 8 9 0 1 2 E 0 0 0 0 0 0 0 0 0 1 1 1 R 0- 1- 2- 3- 4- 5- 6- 7- 8- 9- 0- 1- 3 0 0 0 0 0 0 0 0 0 0 1 1 1 20 20 20 20 20 20 20 20 20 20 20 20 12- 0 2 Centre AIC States AIC Nominal GDP Growth To sum up, India’s Government debt portfolio currency risk to the debt portfolio is insignificant, is characterized by favourable sustainability as is the likely impact of volatile international indicators and right profile. Share of short-term capital markets. Conventional indicators of debt debt is within safe limits, although it has risen in sustainability, level and cost of debt indicate that recent years. Most of the debt is at fixed interest debt profile of government is within sustainable rates which minimizes volatility on the budget. limits, and consistently improving. Debt is mostly of domestic origin implying that 18 Average debt stock is a simple average of outstanding debt at the beginning and at the end of the year. 40ANNEXES 41Annexes Annex 1: Debt Position of the Central Government (` crore) Actuals Provisional Estimates RE BE COMPONENTS OF DEBT 2006-07 2007-08 2008-09 2009-10 2010-11 2010-11 2011-12 2012-13 1 2 3 4 5 6 7 8 9 A. PUBLIC DEBT (B+C) 1656399 1920390 2151595 2471130 2833462 3386710 3906904 4486172 B. INTERNAL DEBT (i+ii) 1553683 1808359 2028549 2337047 2675823 3216622 3734602 4303310 (i) Under MSS (a) Dated Securities 22000 128317 79773 2737 0 0 0 20000 (b) Treasury Bills 40974 42237 9000 0 0 0 0 0 Total (a+b) 62974 170554 88773 2737 0 0 0 20000 (ii) Market Loans (a) Dated Securities 1081823 1204590 1433720 1832145 2157559 2593770 3061155 3545155 (b) Treasury Bills 112901 140382 239979 230210 237969 364835 410581 430425 (c) Compensation & Other Bonds 63585 72814 48996 40221 32495 20208 14843 14322 (d) Securities issued to International Financial Institutions 25798 24719 23085 24483 29315 29626 31216 70803 (e) Securities against small savings 206602 195299 193997 207252 218485 208183 216808 222606 Total (a+b+c+d+e) 1490709 1637805 1939776 2334310 2675823 3216622 3734602 4283310 C. External Debt 102716 112031 123046 134083 157639 170088 172302 182862 D. Other Liabilities (a) National Small Savings Fund 468010 478290 470141 521194 568614 582011 597776 612656 (b) State Provident Fund 71440 75330 83377 99433 111947 122751 132751 142751 (c) Other Account 211452 236373 325383 318749 295989 277904 267675 266688 (d) Reserve funds & Deposit 131295 127043 128682 119453 128762 133877 134325 143517 Bearing Interest 62705 73056 78384 72875 70421 74413 85598 99529 Not bearing interest 68591 53987 50298 46578 58340 59464 48726 43989 Total (a+b+c+d) 882197 917035 1007583 1058830 1105312 1116542 1132527 1165612 E. TOTAL LIABILITIES (A+D) 2538596 2837425 3159178 3529960 3938774 4503252 5039431 5651784 4433Annex II : Statement showing Maturity Profile of Market Loans including Floating Rate Bonds (FRBs) and Conversion of special G 4 4 Securities as on 31st March, 2013 o v e MARKET LOANS SPECIAL SECURITIES r n Year of Dated Floating Conversion of Special Dated Total Oil Fertiliser Food Others Total Grand Total m Maturity Securities Rate Bonds Securities issued to Securities Col.(2) Marketing Companies Corporation Col.(8) Col.(7) e n to Companies of India to + t D Col.(6) Col.(11) Col.(12) e Banks Others b t (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) : S (Amount in Rupees Crore) t a 2013-14 87008.84 4000.00 0.00 4000.00 0.00 95008.84 0.00 0.00 0.00 0.00 0.00 95008.84 t u 2014-15 158018.36 5000.00 0.00 5000.00 0.00 168018.36 3500.00 0.00 0.00 0.00 3500.00 171518.36 s P 2015-16 182243.95 12000.00 0.00 3000.00 0.00 197243.95 0.00 0.00 0.00 0.00 0.00 197243.95 a 2016-17 225129.84 6000.00 0.00 0.00 0.00 231129.84 0.00 0.00 0.00 0.00 0.00 231129.84 p e 2017-18 242773.60 3000.00 0.00 11000.00 0.00 256773.60 0.00 0.00 0.00 0.00 0.00 256773.60 r 2018-19 228347.88 0.00 0.00 6130.00 0.00 234477.88 0.00 0.00 0.00 0.00 0.00 234477.88 2019-20 185000.00 0.00 0.00 12000.00 0.00 197000.00 0.00 0.00 0.00 0.00 0.00 197000.00 2020-21 84000.00 13000.00 0.00 0.00 0.00 97000.00 0.00 0.00 0.00 100.00 100.00 97100.00 2021-22 282213.32 0.00 1632.33 0.00 0.00 283845.65 10000.00 0.00 0.00 400.00 10400.00 294245.65 2022-23 241000.00 0.00 5464.69 11000.00 0.00 257464.69 0.00 2289.18 5000.00 0.00 7289.18 264753.87 2023-24 19000.00 0.00 0.00 8000.00 0.00 27000.00 31150.00 3875.00 0.00 9996.01 45021.01 72021.01 2024-25 102000.00 0.00 0.00 0.00 0.00 102000.00 52860.17 0.00 5000.00 0.00 57860.17 159860.17 2025-26 59000.00 0.00 0.00 16687.95 0.00 75687.95 0.00 3508.24 0.00 0.00 3508.24 79196.19 2026-27 128000.00 0.00 4388.55 0.00 0.00 132388.55 36913.00 0.00 6200.00 0.00 43113.00 175501.55 2027-28 122000.00 0.00 2679.57 0.00 0.00 124679.57 0.00 0.00 0.00 0.00 0.00 124679.57 2028-29 11000.00 0.00 0.00 0.00 0.00 11000.00 0.00 0.00 0.00 0.00 0.00 11000.00 2030-31 73000.00 0.00 0.00 0.00 0.00 73000.00 0.00 0.00 0.00 0.00 0.00 73000.00 2031-32 76000.00 0.00 2687.11 0.00 0.00 78687.11 0.00 0.00 0.00 0.00 0.00 78687.11 2032-33 72000.00 0.00 3956.50 0.00 0.00 75956.50 0.00 0.00 0.00 0.00 0.00 75956.50 2034-35 60000.00 350.00 0.00 0.00 0.00 60350.00 0.00 0.00 0.00 0.00 0.00 60350.00 2035-36 42000.00 0.00 0.00 0.00 0.00 42000.00 0.00 0.00 0.00 0.00 0.00 42000.00 2036-37 86000.00 0.00 0.00 0.00 0.00 86000.00 0.00 0.00 0.00 0.00 0.00 86000.00 2038-39 13000.00 0.00 0.00 0.00 0.00 13000.00 0.00 0.00 0.00 0.00 0.00 13000.00 2040-41 72000.00 0.00 0.00 0.00 0.00 72000.00 0.00 0.00 0.00 0.00 0.00 72000.00 2041-42 60000.00 0.00 0.00 0.00 0.00 60000.00 0.00 0.00 0.00 0.00 0.00 60000.00 2042-43 9000.00 0.00 0.00 0.00 0.00 9000.00 0.00 0.00 0.00 0.00 0.00 9000.00 Total 2919735.79 43350.00 20808.75 76817.95 0.00 3060712.49 134423.17 9672.42 16200.00 10496.01 170791.60 3231504.09 Memo Items: Unclaimed Amount/ Outstanding agianst matured Securities 442.06 Total 3061154.55Annex - III : Statement showing Weighted Average Interest Rate of Interest (Maturity year wise) on Market Loans including FRBs Conversion of Special Securities to Banks and Special Securities to others as on 31st March, 2013 MARKET LOANS SPECIAL SECURITIES Year of Dated Floating Conversion of Special Dated Total Oil Fertiliser Food Others Total Grand Total Maturity Securities Rate Bonds Securities issued to Securities Col.(2) Marketing Companies Corporation Col.(8) Col.(7) to Companies of India to + Col.(6) Col.(11) Col.(12) Banks Others (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (Weighted Average Rate of Interest) 2013-14 8.12 8.52 0.00 7.27 0.00 8.10 0.00 0.00 0.00 0.00 0.00 8.10 2014-15 7.61 8.37 0.00 7.37 0.00 7.62 7.60 0.00 0.00 0.00 7.60 7.62 2015-16 7.65 8.38 0.00 7.38 0.00 7.69 0.00 0.00 0.00 0.00 0.00 7.69 2016-17 7.93 8.29 0.00 0.00 0.00 7.94 0.00 0.00 0.00 0.00 0.00 7.94 2017-18 7.69 8.48 0.00 6.81 0.00 7.66 0.00 0.00 0.00 0.00 0.00 7.66 2018-19 7.67 0.00 0.00 5.69 0.00 7.62 0.00 0.00 0.00 0.00 0.00 7.62 2019-20 7.33 0.00 0.00 6.18 0.00 7.26 0.00 0.00 0.00 0.00 0.00 7.26 2020-21 8.28 8.15 0.00 0.00 0.00 8.27 0.00 0.00 0.00 11.50 11.50 8.27 2021-22 8.42 0.00 8.20 0.00 0.00 8.42 7.94 0.00 0.00 9.75 8.01 8.41 2022-23 8.16 0.00 8.10 5.87 0.00 8.06 0.00 6.74 8.15 0.00 7.71 8.05 2023-24 6.26 0.00 0.00 6.17 0.00 6.23 8.17 8.30 0.00 8.35 8.22 7.48 2024-25 8.97 0.00 0.00 0.00 0.00 8.97 7.41 0.00 8.03 0.00 7.46 8.43 2025-26 8.20 0.00 0.00 5.97 0.00 7.71 0.00 7.95 0.00 0.00 7.95 7.72 2026-27 8.51 0.00 8.24 0.00 0.00 8.50 7.40 0.00 8.23 0.00 7.52 8.26 2027-28 7.99 0.00 8.27 0.00 0.00 8.00 0.00 0.00 0.00 0.00 0.00 8.00 2028-29 6.13 0.00 0.00 0.00 0.00 6.13 0.00 0.00 0.00 0.00 0.00 6.13 2030-31 8.97 0.00 0.00 0.00 0.00 8.97 0.00 0.00 0.00 0.00 0.00 8.97 2031-32 8.28 0.00 8.28 0.00 0.00 8.28 0.00 0.00 0.00 0.00 0.00 8.28 2032-33 8.02 0.00 8.32 0.00 0.00 8.03 0.00 0.00 0.00 0.00 0.00 8.03 2034-35 7.50 7.17 0.00 0.00 0.00 7.50 0.00 0.00 0.00 0.00 0.00 7.50 2035-36 7.40 0.00 0.00 0.00 0.00 7.40 0.00 0.00 0.00 0.00 0.00 7.40 2036-37 8.33 0.00 0.00 0.00 0.00 8.33 0.00 0.00 0.00 0.00 0.00 8.33 2038-39 6.83 0.00 0.00 0.00 0.00 6.83 0.00 0.00 0.00 0.00 0.00 6.83 2040-41 8.30 0.00 0.00 0.00 0.00 8.30 0.00 0.00 0.00 0.00 0.00 8.30 2041-42 8.83 0.00 0.00 0.00 0.00 8.83 0.00 0.00 0.00 0.00 0.00 8.83 2042-43 8.30 0.00 0.00 0.00 0.00 8.30 0.00 0.00 0.00 0.00 0.00 8.30 Weighted Average Interest Rate as on 31st March,2013 8.01 8.31 8.23 6.32 0.00 7.97 7.60 7.12 8.14 8.36 7.22 7.93 45 AnnexesGovernment Debt : Status Paper Annex -IV : List of Government of India Securities Outstanding as on March 31, 2013 - Maturity Year Wise (` In crore) Sl.No. Nomenclature Date of Issue Date of Security wise Maturity Maturity Outstanding Year Wise Stock Outstanding stock 1 2 3 4 5 6 2013-14 1 9.00% GS 2013 24-May-1982 24-May-2013 1,751.33 2 9.81% GS 2013 30-May-2001 30-May-2013 11,000.00 3 12.40% GS 2013 20-Aug-1998 20-Aug-2013 11,983.91 4 7.27% GS 2013 (conv) 3-Sep-2002 3-Sep-2013 46,000.00 5 FRB, 2013 10-Sep-2004 10-Sep-2013 4,000.00 6 6.72% GS 2014 24-Feb-2003 24-Feb-2014 15,273.60 7 5.32% GS 2014 16-Feb-2004 16-Feb-2014 5,000.00 95,008.84 2014-15 8 7.37% GS 2014 16-Apr-2002 16-Apr-2014 42,000.00 9 6.07% GS 2014 15-May-2009 15-May-2014 40,000.00 10 FRB, 2014 20-May-2003 20-May-2014 5,000.00 11 10.00% GS 2014 30-May-1983 30-May-2014 2,333.26 12 7.32% GS 2014 20-Oct-2009 20-Oct-2014 18,000.00 13 10.50% GS 2014 29-Oct-1984 29-Oct-2014 1,755.10 14 7.56% GS2014 3-Nov-2008 3-Nov-2014 41,000.00 15 11.83% GS 2014 12-Nov-1999 12-Nov-2014 11,500.00 16 10.47% GS 2015 12-Feb-2001 12-Feb-2015 6,430.00 1,68,018.36 2015-16 17 10.79% GS 2015 19-May-2000 19-May-2015 2,683.45 18 11.50% GS 2015 21-May-1985 21-May-2015 3,560.50 19 6.49% GS 2015 8-Jun-2009 8-Jun-2015 40,000.00 20 7.17% GS 2015 14-Jun-2010 14-Jun-2015 56,000.00 21 FRB, 2015 2-Jul-2004 2-Jul-2015 6,000.00 22 11.43% GS 2015 7-Aug-2000 7-Aug-2015 12,000.00 23 FRB, 2015(II) 10-Aug-2004 10-Aug-2015 6,000.00 24 7.38% GS 2015 (conv) 3-Sep-2002 3-Sep-2015 61,000.00 25 9.85% GS 2015 16-Oct-2001 16-Oct-2015 10,000.00 1,97,243.95 2016-17 26 7.59% GS 2016 12-Apr-2006 12-Apr-2016 68,000.00 27 10.71% GS 2016 19-Apr-2001 19-Apr-2016 9,000.00 28 FRB, 2016 7-May-2004 7-May-2016 6,000.00 29 5.59% GS 2016 4-Jun-2004 4-Jun-2016 6,000.00 30 12.30% GS 2016 2-Jul-1999 2-Jul-2016 13,129.84 31 7.02% GS 2016 17-Aug-2009 17-Aug-2016 60,000.00 32 8.07% GS 2017 15-Jan-2002 15-Jan-2017 69,000.00 2,31,129.84 2017-18 33 7.49% GS 2017 (con) 16-Apr-2002 16-Apr-2017 58,000.00 34 FRB-2017 2-Jul-2002 2-Jul-2017 3,000.00 35 8.07% GS 2017 3-Jul-2012 3-Jul-2017 50,000.00 36 7.99% GS 2017 9-Jul-2007 9-Jul-2017 71,000.00 37 7.46% GS 2017 28-Aug-2002 28-Aug-2017 57,886.80 38 6.25% GS 2018 (conv) 2-Jan-2003 2-Jan-2018 16,886.80 2,56,773.60 4466Annexes Sl.No. Nomenclature Date of Issue Date of Security wise Maturity Maturity Outstanding Year Wise Stock Outstanding stock 1 2 3 4 5 6 2018-19 46 7.83% GS 2018 11-Apr-2011 11-Apr-2018 64,000.00 47 8.24% GS 2018 22-Apr-2008 22-Apr-2018 75,000.00 48 10.45% GS 2018 30-Apr-2001 30-Apr-2018 3,716.00 49 5.69% GS 2018(Conv)] 25-Sep-2003 25-Sep-2018 16,130.00 50 12.60 % GS 2018 23-Nov-1998 23-Nov-2018 12,631.88 51 5.64% GS 2019 2-Jan-2004 2-Jan-2019 10,000.00 52 6.05% GS 2019 (FEB) 2-Feb-2009 2-Feb-2019 53,000.00 2,34,477.88 2019-20 53 6.05% GS 2019 (con) 12-Jun-2003 12-Jun-2019 11,000.00 54 6.90% GS 2019 13-Jul-2009 13-Jul-2019 45,000.00 55 10.03% GS 2019 9-Aug-2001 9-Aug-2019 6,000.00 56 6.35% GS 2020 (con) 2-Jan-2003 2-Jan-2020 61,000.00 57 8.19% GS 2020 16-Jan-2012 16-Jan-2020 74,000.00 1,97,000.00 2020-21 58 10.70% GS 2020 22-Apr-2000 22-Apr-2020 6,000.00 59 7.80% GS 2020 3-May-2010 3-May-2020 60,000.00 60 FRB, 2020 21-Dec-2009 21-Dec-2020 13,000.00 61 8.12% GS 2020 10-Dec-2012 10-Dec-2020 13,000.00 62 11.60% GS 2020 27-Dec-2000 27-Dec-2020 5,000.00 97,000.00 2021-22 63 7.80% GS 2021 11-Apr-2011 11-Apr-2021 68,000.00 64 7.94% GS 2021 24-May-2006 24-May-2021 49,000.00 65 10.25% GS 2021 30-May-2001 30-May-2021 26,213.32 66 8.79% GS 2021 8-Nov-2011 8-Nov-2021 83,000.00 67 8.20% GS 2022 15-Feb-2007 15-Feb-2022 57,632.33 2,83,845.65 2022-23 68 8.35% GS 2022 14-May-2002 14-May-2022 44,000.00 69 8.15% GS 2022 11-Jun-2012 11-Jun-2022 70,000.00 70 8.08% GS 2022 2-Aug-2007 2-Aug-2022 61,969.41 71 5.87% GS 2022 (conv) 28-Aug-2003 28-Aug-2022 11,000.00 72 8.13% GS 2022 21-Sep-2007 21-Sep-2022 70,495.28 2,57,464.69 2023-24 73 6.30% GS 2023 9-Apr-2003 9-Apr-2023 13,000.00 74 6.17% GS 2023 (conv) 12-Jun-2003 12-Jun-2023 14,000.00 27,000.00 2024-25 75 7.35% GS 2024 22-Jun-2009 22-Jun-2024 10,000.00 76 9.15% GS 2024 14-Nov-2011 14-Nov-2024 92,000.00 1,02,000.00 2025-26 77 8.20% GS 2025 24-Sep-2012 24-Sep-2025 59,000.00 78 5.97% GS 2025 (Conv) 25-Sep-2003 25-Sep-2025 16,687.95 75,687.95 2026-27 79 8.33% GS 2026 9-Jul-2012 9-Jul-2026 60,000.00 80 10.18% GS 2026 11-Sep-2001 11-Sep-2026 15,000.00 81 8.24% GS 2027 15-Feb-2007 15-Feb-2027 57,388.55 1,32,388.55 4477Government Debt : Status Paper Sl.No. Nomenclature Date of Issue Date of Security wise Maturity Maturity Outstanding Year Wise Stock Outstanding stock 1 2 3 4 5 6 2027-28 82 8.26% GS 2027 2-Aug-2007 2-Aug-2027 73,427.33 83 8.28% GS 2027 21-Sep-2007 21-Sep-2027 36,252.24 84 6.01% GS 2028 8-Aug-2003 25-Mar-2028 15,000.00 1,24,679.57 2028-29 85 6.13% GS 2028 4-Jun-2003 4-Jun-2028 11,000.00 11,000.00 2030-31 86 8.97% GS 2030 5-Dec-2011 5-Dec-2030 73,000.00 73,000.00 2031-32 87 8.28% GS 2032 15-Feb-2007 15-Feb-2032 78,687.11 78,687.11 2032-33 88 8.32% GS 2032 2-Aug-2007 2-Aug-2032 15,434.02 89 7.95% GS 2032 28-Aug-2002 28-Aug-2032 59,000.00 90 8.33% GS 2032 21-Sep-2007 21-Sep-2032 1,522.48 75,956.50 2034-35 91 7.50% GS 2034 10-Aug-2004 10-Aug-2034 60,000.00 92 FRB, 2035 25-Jan-2005 25-Jan-2035 350.00 60,350.00 2035-36 93 7.40% GS 2035 9-Sep-2005 9-Sep-2035 42,000.00 42,000.00 2036-37 94 8.33% GS 2036 7-Jun-2006 7-Jun-2036 86,000.00 86,000.00 2038-39 95 6.83% GS 2039 19-Jan-2009 19-Jan-2039 13,000.00 13,000.00 2040-41 96 8.30% GS 2040 2-Jul-2010 2-Jul-2040 72,000.00 72,000.00 2041-42 97 8.83% GS 2041 12-Dec-2011 12-Dec-2041 60,000.00 60,000.00 2042-43 98 8.30% GS 2042 31-Dec-2012 31-Dec-2042 9,000.00 9,000.00 Total 30,60,712.49 30,60,712.49 4488Annexes Annex - V : List of Government of India Securities Outstanding as on March 31, 2013 - Interest Rate Wise (` In crore) Sl.No. Nomenclature Coupen Date of Amount Sub Total % of Govt. Security (per cent) Maturity of Total 1 2 3 4 4 6 7 GOI Securities bearing Interest rate less than or equal to 7% 1 5.32% Government Stock 2014 5.32 16-Feb-2014 5,000.00 2 5.59% Government Stock 2016 5.59 4-Jun-2016 6,000.00 3 5.64% Government Stock 2019 5.64 2-Jan-2019 10,000.00 4 5.69% Government Stock 2018 (Conv)] 5.69 25-Sep-2018 16,130.00 5 5.87% Government Stock 2022 (conv) 5.87 28-Aug-2022 11,000.00 6 5.97% Government Stock 2025 (Conv) 5.97 25-Sep-2025 16,687.95 7 6.01% Government Stock 2028 (C Align) 6.01 25-Mar-2028 15,000.00 8 6.05% Government Stock 2019 (con) 6.05 12-Jun-2019 11,000.00 9 6.05% Government Stock 2019 (FEB) 6.05 2-Feb-2019 53,000.00 10 6.07% Government Stock 2014 6.07 15-May-2014 40,000.00 11 6.13% Government Stock 2028 6.13 4-Jun-2028 11,000.00 12 6.17% Government Stock 2023 (conv) 6.17 12-Jun-2023 14,000.00 13 6.25% Government Stock 2018 (conv) 6.25 2-Jan-2018 16,886.80 14 6.30% Government Stock 2023 6.30 9-Apr-2023 13,000.00 15 6.35% Government Stock 2020 (con) 6.35 2-Jan-2020 61,000.00 16 6.49% Government Stock 2015 6.49 8-Jun-2015 40,000.00 17 6.72% Government Stock 2014 6.72 24-Feb-2014 15,273.60 18 6.83% Government Stock 2039 6.83 19-Jan-2039 13,000.00 19 6.90% Government Stock 2019 6.90 13-Jul-2019 45,000.00 412978.35 13.5 GOI Securities bearing Interest rate above 7% but less than or equal to 8% 20 7.02% Government Stock 2016 7.02 17-Aug-2016 60,000.00 21 GoI Floating Rate Bonds, 2035 7.17 25-Jan-2035 350.00 22 7.17% Government Stock 2015 7.17 14-Jun-2015 56,000.00 23 7.27% Government Stock 2013 (conv) 7.27 3-Sep-2013 46,000.00 24 7.32% Government Stock 2014 7.32 20-Oct-2014 18,000.00 25 7.35% Government Stock 2024 7.35 22-Jun-2024 10,000.00 26 7.37% Government Stock 2014 7.37 16-Apr-2014 42,000.00 27 7.38% Government Stock 2015 (conv) 7.38 3-Sep-2015 61,000.00 28 7.40% Government Stock 2035 7.40 9-Sep-2035 42,000.00 29 7.46% Government Stock 2017 7.46 28-Aug-2017 57,886.80 30 7.49% Government Stock 2017 (con) 7.49 16-Apr-2017 58,000.00 31 7.50% Government Stock 2034 7.50 10-Aug-2034 60,000.00 32 7.56% Government Stock2014 7.56 3-Nov-2014 41,000.00 33 7.59% Government Stock 2016 7.59 12-Apr-2016 68,000.00 34 7.80% Government Stock 2021 7.80 11-Apr-2021 68,000.00 35 7.80% Government Stock 2020 7.80 3-May-2020 60,000.00 36 7.83% Government Stock 2018 7.83 11-Apr-2018 64,000.00 37 7.94% Government Stock 2021 7.94 24-May-2021 49,000.00 38 7.95% Government Stock 2032 7.95 28-Aug-2032 59,000.00 39 7.99% Government Stock 2017 7.99 9-Jul-2017 71,000.00 991236.80 32.4 GOI Securities bearing Interest rate above 8% but less than or equal to 9% 40 8.07% Government Stock 2017 8.07 3-Jul-2017 50,000.00 41 8.07% Government Stock 2017 8.07 15-Jan-2017 69,000.00 42 8.08% Government Stock 2022 8.08 2-Aug-2022 61,969.41 43 8.12% Government Stock 2020 8.12 21-Dec-2020 13,000.00 44 8.13% Government Stock 2022 8.13 21-Sep-2022 70,495.28 4499Government Debt : Status Paper Sl.No. Nomenclature Coupen Date of Amount Sub Total % of Govt. Security (per cent) Maturity of Total 1 2 3 4 4 6 7 45 8.15% Government Stock 2022 8.15 11-Jun-2022 70,000.00 46 GoI Floating Rate Bonds, 2020 8.15 10-Dec-2020 13,000.00 47 8.19% Government Stock 2020 8.19 16-Jan-2020 74,000.00 48 8.20% Government Stock 2025 8.20 24-Sep-2025 59,000.00 49 8.20% Government Stock 2022 8.20 15-Feb-2022 57,632.33 50 8.24% Government Stock 2027 8.24 15-Feb-2027 57,388.55 51 8.24% Government Stock 2018 8.24 22-Apr-2018 75,000.00 52 GoI Floating Rate Bonds, 2015 8.24 2-Jul-2015 6,000.00 53 8.26% Government Stock 2027 8.26 2-Aug-2027 73,427.33 54 8.28% Government Stock 2032 8.28 15-Feb-2032 78,687.11 55 8.28% Government Stock 2027 8.28 21-Sep-2027 36,252.24 56 GoI Floating Rate Bonds, 2016 8.29 7-May-2016 6,000.00 57 8.30% Government Stock 2042 8.30 31-Dec-2042 9,000.00 58 8.30% Government Stock 2040 8.30 2-Jul-2040 72,000.00 59 8.32% Government Stock 2032 8.32 2-Aug-2032 15,434.02 60 8.33% Government Stock 2036 8.33 7-Jun-2036 86,000.00 61 8.33% Government Stock 2032 8.33 21-Sep-2032 1,522.48 62 8.33% Government Stock 2026 8.33 9-Jul-2026 60,000.00 63 8.35% Government Stock 2022 8.35 14-May-2022 44,000.00 6 GoI Floating Rate Bonds, 2014 8.37 20-May-2014 5,000.00 65 GoI Floating Rate Bonds-2017 8.38 2-Jul-2017 3,000.00 66 GoI Floating Rate Bonds, 2015(II) 8.51 10-Aug-2015 6,000.00 67 GoI Floating Rate Bonds, 2013 8.52 10-Sep-2013 4,000.00 68 8.79% Government Stock 2021 8.79 8-Nov-2021 83,000.00 69 8.83% Government Stock 2041 8.83 12-Dec-2041 60,000.00 70 8.97% Government Stock 2030 8.97 5-Dec-2030 73,000.00 71 9.00% Government Stock 2013 9.00 24-May-2013 1,751.33 1394560.08 45.6 GOI Securities bearing Interest rate above 9% 72 9.15% Government Stock 2024 9.15 14-Nov-2024 92,000.00 73 9.81% Government Stock 2013 9.81 30-May-2013 11,000.00 74 9.85% Government Stock 2015 9.85 16-Oct-2015 10,000.00 75 10.00% Government Stock 2014 10.00 30-May-2014 2,333.26 76 10.03% Government Stock 2019 10.03 9-Aug-2019 6,000.00 77 10.18% Government Stock 2026 10.18 11-Sep-2026 15,000.00 78 10.25% Government Stock 2021 10.25 30-May-2021 26,213.32 79 10.45% Government Stock 2018 10.45 30-Apr-2018 3,716.00 80 10.47% Government Stock 2015 10.47 12-Feb-2015 6,430.00 81 10.50% Government Stock 2014 10.50 29-Oct-2014 1,755.10 82 10.70% Government Stock 2020 10.70 22-Apr-2020 6,000.00 83 10.71% Government Stock 2016 10.71 19-Apr-2016 9,000.00 84 10.79% Government Stock 2015 10.79 19-May-2015 2,683.45 85 11.43% Government Stock 2015 11.43 7-Aug-2015 12,000.00 86 11.50% Government Stock 2015 11.50 21-May-2015 3,560.50 87 11.60% Government Stock 2020 11.60 27-Dec-2020 5,000.00 88 11.83% Government Stock 2014 11.83 12-Nov-2014 11,500.00 89 12.30% Government Stock 2016 12.30 2-Jul-2016 13,129.84 90 12.40% Government Stock 2013 12.40 20-Aug-2013 11,983.91 91 12.60% Government Stock 2018 12.60 23-Nov-2018 12,631.88 261937.26 8.6 Total 3060712.49 3060712.49 100.0 5500Annexes Annex - VI : List of Government Securities Issued to NSSF Outstanding as on March 31 2013 (` In crore) Nomenclature/ Coupon / Date of Outstanding Amount Name of Securities Interest Rate issue Initial as at end- as at end- as at end- Amount March 2011 March 2012 March 2013 (1) (2) (3) (4) (5) (6) (7) Category I 10.5% Special GOI Securities 10.5 01-Apr-99 73,569.2 73,569.2 64,569.2 64,569.2 Category II 13.5% Special GOI Securities 13.5 - 8978.9 6285.2 5836.3 5387.3 12.5% Special GOI Securities 12.5 - 8316.3 6237.2 5821.4 5405.6 11.0% Special GOI Securities 11.0 - 8754.6 7003.6 6565.9 6128.2 9.5% Special GOI Securities 9.5 - 2500.0 2500.0 2500.0 2500.0 9.5% Special GOI Securities 9.5 - 12535.7 12535.7 12535.7 12535.7 Sub-total 41085.4 34561.8 33259.3 31956.8 Category III 7.0% Special GOI Securities, 2023 7.0 01-Apr-03 13765.6 13765.6 13765.6 13765.6 6.0% Special GOI Securities, 2023 6.0 30-Sep-03 32602.3 32602.3 32602.3 32602.3 5.95% Special GOI Securities, 2024 5.95 31-Mar-24 13608.9 13608.9 13608.9 13608.9 6.96% Special GOI Securities, 2024 6.96 31-Dec-04 22665.0 22665.0 22665.0 22665.0 7.0% Special GOI Securities, 2025 7.00 01-Apr-05 10010.0 10010.0 10010.0 10010.0 7.5% Special GOI Securities, 2025 7.50 30-Sep-05 888.0 888.0 888.0 888.0 7.6% Special GOI Securities, 2026 7.60 31-Mar-06 907.9 907.9 907.9 907.9 8.17% Special GOI Securities, 2026 8.17 30-Sep-06 2015.9 2015.9 2015.9 2015.9 7.88% Special GOI Securities, 2027 7.88 31-Mar-07 1832.9 1832.9 1832.9 1832.9 7.64% Special GOI Securities, 2029 7.64 30-Sep-09 6000.0 6000.0 6000.0 6000.0 8.21% Special GOI Securities, 2030 13.50 31-Mar-10 6058.0 6058.0 6058.0 6058.0 Additional Securities Issued during 2012-13 - - - - - 9928.0 Sub-total 110354.3 110354.3 110354.3 120282.3 TOTAL 225008.9 218485.3 208182.8 216808.3 5511Government Debt : Status Paper Annex - VII : Interest rate on Various Small Savings Instruments Instrument Rate of interest Rate of Interest Revised Rate Revised Rate (%) (%) (%) (%) Before 1.12.2011 w.e.f. 1.12.2011 (w.e.f. 1.4.2012) (w.e.f. 1.4.2013) (1) (2) (3) (4) (5) Savings Deposit 3.5 4.0 4.0 4.0 1 year Time Deposit 6.3 7.7 8.2 8.2 2 year Time Deposit 6.5 7.8 8.3 8.2 3 year Time Deposit 7.3 8.0 8.4 8.3 5 year Time Deposit 7.5 8.3 8.5 8.4 5 year Recurring Deposit 7.5 8.0 8.4 8.3 5 year SCSS 9.0 9.0 9.3 9.2 5 year MIS 8.0 8.2 8.5 8.4 (6 Year MIS) 5 year NSC 8.0 8.4 8.6 8.5 (6 year NSC) 10 year NSC New Instrument 8.7 8.9 8.8 PPF 8.0 8.6 8.8 8.7 5522Annex VIII : Donor-wise Sovereign External Debt (` Crore) at end-March Category 2003 2004 2005 2006 2007 2008 2009 2010 2011 PR 2012 PR 2013 PR (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) I. External Debt on Government Account under External Assistance (A+B) 1,96,067.6 1,84,202.8 1,91,270.9 1,94,198.5 2,01,199.0 2,10,086.0 2,64,059.5 2,49,305.7 2,78,877.4 3,22,896.6 3,32,003.8 A. Multilateral (1 to 5) 1,29,715.6 1,20,123.5 1,27,916.9 1,33,923.4 1,41,736.5 1,44,631.7 1,81,996.9 1,70,723.4 1,90,325.2 2,22,584.3 2,35,670.8 1. IDA 1,01,092.8 1,00,066.1 1,03,755.9 1,04,539.5 1,07,019.7 1,05,947.9 1,26,120.3 1,14,552.2 1,19,066.3 1,36,822.0 1,41,119.4 2. IBRD 19,058.4 14,097.6 16,525.4 19,639.3 21,862.7 22,634.4 29,949.3 28,875.2 39,219.0 45,327.5 48,239.3 3. ADB 8,098.8 4,509.4 6,168.1 8,321.3 11,433.4 14,593.8 24,283.5 25,802.7 30,455.1 38,560.0 44,301.0 4. IFAD 1,174.3 1,172.1 1,210.9 1,191.4 1,218.8 1,244.0 1,437.3 1,299.7 1,397.4 1,661.9 1,788.5 5. Others 291.2 278.4 256.6 231.9 201.9 211.6 206.6 193.7 187.4 212.8 222.5 B. Bilateral (1 to 6) 66,352.1 64,079.3 63,354.0 60,275.1 59,462.5 65,454.3 82,062.6 78,582.3 88,552.2 1,00,312.3 96,333.0 1. Japan 40,097.6 43,210.0 42,275.0 39,895.6 38,014.1 43,206.8 56,599.5 56,163.9 65,907.3 76,401.1 73,120.4 2. Germany 11,022.9 11,244.4 11,216.1 10,190.4 10,658.0 11,392.7 12,565.5 11,097.0 11,899.0 13,764.6 13,825.8 3. Russian Federation 1,969.8 2,560.6 3,576.4 4,626.6 5,760.2 6,336.0 8,249.4 7,683.8 7,485.3 6,952.7 6,396.2 4. France 2,862.4 2,851.2 2,803.5 2,473.8 2,446.3 2,452.0 2,406.3 1,900.8 1,750.3 1,657.4 1,514.1 5. USA 4,878.5 4,041.7 3,457.6 3,071.2 2,567.1 2,049.5 2,215.8 1,715.3 1,489.2 1,516.5 1,460.3 6. Others 5,521.0 171.5 25.5 17.6 17.0 17.4 26.2 21.5 21.1 20.1 16.3 Memo items: Multilateral (per cent to total External Assistance) 66.2 65.2 66.9 69.0 70.4 68.8 68.9 68.5 68.2 68.9 71.0 Bilateral (per cent to total External Assistance) 33.8 34.8 33.1 31.0 29.6 31.2 31.1 31.5 31.8 31.1 29.0 Exchange Rates as per Finance A Accounts 47.6 44.8 43.8 44.7 43.2 40.2 50.6 45.1 44.7 51.0 n n 5 e 3 Source: Finance Accounts of Government of India, various years. x e sAnnex - IX: Currency composition of Sovereign External Debt (` Crore) at end-March Currency 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 PR (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) Special Drawing Rights 76032.6 77682.5 83012.3 84468.2 88751.3 90085.2 107323.1 98941.4 104839.7 121951.8 126680.9 US Dollar 59327.1 47535.0 50563.0 55904.5 60152.0 61869.4 84164.7 80281.0 93598.1 108258.6 116036.4 Japanese Yen 40097.6 43210.0 42275.0 39895.6 38014.1 43206.8 56599.5 56163.9 65907.3 76401.1 73120.4 Euro 16456.1 14238.1 14019.6 12664.2 13104.2 13844.7 14973.7 12999.5 13651.1 15423.8 15341.8 INR 1459.1 1316.5 1183.8 1072.0 974.8 892.6 825.0 770.7 731.0 702.2 674.5 GBP 187.3 196.0 191.8 176.6 185.5 169.9 149.2 129.4 130.9 140.9 135.4 SW Francs 556.8 24.8 25.5 17.6 17.0 17.4 24.3 19.8 19.3 18.2 14.4 Can. Dollar 1393.4 - - - - - - - - - - D.Kroner 391.7 - - - - - - - - - - Kwaiti Dinar 132.3 - - - - - - - - - - Saudi Riyal 33.6 - - - - - - - - - - Total: 196067.6 184202.8 191270.9 194198.5 201199.0 210086.0 264059.5 249305.7 278877.4 322896.6 332003.8 54 Annex G o v e r n m e n t D e b t : S t a t u s P a p e r