India’s Debt Burden Zooms to Rs 84.68 Lakh Crore in First Quarter of FY20

New Delhi: Total liabilities of the government increased to Rs 88.18 lakh crore at end-June 2019 from Rs 84.68 lakh crore at end-March 2019, according to the latest data on public debt.

Public debt accounted for 89.4% of total outstanding liabilities at end-June 2019, the quarterly report on public debt management released on Friday said.

"Nearly 28.9 per cent of the outstanding dated securities had a residual maturity of less than 5 years. The holding pattern indicates a share of 40.3 per cent for commercial banks and 24.3 per cent for insurance companies at end-March 2019," it said.

During the first quarter of the current fiscal, the Central government issued dated securities worth Rs 2,21,000 crore against Rs 1,44,000 crore in the same period a year ago.

The weighted average maturity (WAM) of new issuances stood at 15.86 years in the quarter against 14.18 years in the fourth quarter of the last fiscal, according to data collated by Public Debt Management Cell (PDMC).

G-Sec yields have shown a moderating trend in the first quarter of the fiscal with the rate declining to 7.21% compared with the weighted average yield of 7.47% in the previous quarter.

This reflected the impact of several developments namely reduction in policy repo rate twice under the LAF by 25 basis points each, OMO purchase auction and a downward movement in the yield on US 10-year treasury bond.

During April-June 2019, the Central government did not raise any amount through the issuance of Cash Management Bills and the net average liquidity injection by the Reserve Bank of India under Liquidity Adjustment Facility (LAF) including Marginal Standing Facility (MSF) was Rs 17,599.3 crore during the quarter.

The yield on 10-year benchmark G-Sec (7.26% GS 2029) closed at 6.88% on June 29, 2019, it said.

The central government dated securities continued to account for a major share of total trading volumes in the secondary market, with a share of 86.0 per cent in total outright trading volumes in value terms during the first quarter of the current fiscal, it added.

With regard to net foreign direct investment (FDI), it increased substantially at 51% to $14.4 billion as compared to $9.5 billion in the first quarter of the previous fiscal.

India's foreign exchange reserves stood at $427.7 billion as on June 28, 2019, up from $406.1 billion over that on June 29, 2018.

Debt Burden ‘Worrisome’, Says Congress

The Congress on Saturday questioned how the government’s debt burden had risen so sharply in just one quarter.

India had a "worrisome" debt burden of over Rs 88 lakh crore at the first financial quarter of 2019 with the government apparently having no inkling to deal with the country's economic slowdown, the Congress said on Saturday.

Addressing a press conference, Congress spokesperson Supriya Shrinate also said the debt has risen by 4% compared with the last quarter.

“India''s debt stands at Rs 88.18 lakh crore at the end of June 2019, according to the latest data on public debt. This is a 4% jump from the previous quarter i.e. a rise in debt by Rs 3.5-4 lakh crore. It is worrisome,” Shrinate said.

“There seems to be no plan with the government to deal with the economic slowdown,” she said, adding there was no proper communication between the government and the country’s central bank- Reserve Bank of India.

“The government may have reduced corporate taxes but that does not encourage corporates to invest more as there is no money or demand in the market”, she added.

“This government is bewildered. Finance Minister says one thing, RBI says something else. There seems to be no proper communication between them. The debt figure shows the fiscal discipline is not being adhered to,” she said.