India / Govt debt crosses ₹100 lakh crore for the first time

New Delhi: The government’s total liabilities rose by a steep 7.1%, or Rs 6.73 lakh crore, in the April-June period to over Rs 101.35 lakh crore, against a 0.8% increase in the previous quarter, a finance ministry report said on Friday, reflecting the enormous pressure the Covid-19 pandemic exerted on government finances.

As of end-March, the total liabilities, which also include the liabilities under the ‘Public Account’, stood at Rs 94.62 lakh crore.

To tide over the deficit caused by a fall in revenue collection during the pandemic, the Centre issued dated securities aggregating to Rs 3,46,000 crore in the June quarter, much higher than the Rs 2,21,000 crore a year before, showed the finance ministry’s quarterly report on debt management.

However, the weighted average yield of primary issuances showed a sharp fall to 5.85% in the April-June period, compared with 6.7% in the March quarter. This reflected the impact of several developments, such as a sharp decline in crude oil prices in April, reduction in the repo rate by 40 basis points to 4% by the Monetary Policy Committee on May 22 and surplus liquidity conditions in the market. The weighted average maturity of new issuances of dated securities was lower at 14.61 years in the June quarter, against 16.87 years in the previous three months.

Public debt made up for 91.1% of total outstanding liabilities at the end of June. Nearly 28.6% of the outstanding dated securities had a residual maturity of less than 5 years. The ownership pattern indicates a share of 39% for commercial banks and 26.2% for insurance companies at end-June.

The Reserve Bank of India conducted one special open market operation involving simultaneous purchase and sale of government securities for Rs 10,000 crore each during the quarter ended June 2020. “The net average liquidity absorption by RBI under Liquidity Adjustment Facility (LAF), including Marginal Standing Facility and Special Liquidity Facility, was Rs 4,51,045 crore during the quarter,” the report said.

Central government dated securities continued to account for a major share of total trading volumes in the secondary market with a share of 74% in total outright trading volumes in value terms during the June quarter, the report said.