Since Apr-June (Q1) 2010-11, Public Debt Management Cell (PDMC), Budget Division, Department of Economic Affairs, Ministry of Finance has been bringing out a quarterly report on debt management on a regular basis. The current report pertains to the quarter April-June (Q1 FY23).
During Q1 of FY23, the Central Government raised an amount through dated securities worth Rs 3,90,000 crore as against Rs 3,18,493 crore in Q1 of FY22, while repayments were at Rs 1,34,989.71 crore. The weighted average yield of primary issuances hardened to 6.95 per cent in Q1 FY23 from 6.66 per cent in Q4 of FY22. The weighted average maturity of new issuances of dated securities was lower at 15.69 years in Q1 of FY23 as compared to 17.56 years in Q4 of FY22. During April- June 2022, the Central Government did not raise any amount through the Cash Management Bills. The Reserve Bank did not conduct Open Market operations for government securities during the quarter. The net daily average liquidity absorption by RBI under Liquidity Adjustment Facility (LAF) including Marginal Standing Facility and Special Liquidity Facility was at Rs 4,52,405.87 crore during the quarter.
Total gross liabilities (including liabilities under the ‘Public Account’) of the Government, as per provisional data, increased to Rs 1,45,72,956 crore at end-June 2022 from Rs 1,39,58,774 crore at end- March 2022. This represented a quarter-on-quarter increase of 4.40 per cent in Q1 FY23. Public debt accounted for 88.3 per cent of total gross liabilities at end-June 2022 up from 88.1 per cent at end- March 2022. Nearly 28.9 per cent of the outstanding dated securities had a residual maturity of less than 5 years.
The yields on Government securities hardened in the secondary market due to increase in supply of G-secs during the first quarter of FY23. However, the yields were supported by decision of MPC to hike the policy repo rate by 40 bps, i.e., from 4.00% to 4.40% on 4th May, 2022 largely with an intention to contain inflation during the Q1 FY23.
In secondary market, trading activities were concentrated in 7-10 year maturity bucket during the quarter mainly because of more trading observed in 10 year benchmark security. Private Sector Banks emerged as dominant trading segment in secondary market during the quarter. On a net basis, foreign banks and primary dealers were net sellers while public sector banks, co-operative banks, FIs, insurance companies, mutual funds, private sector banks and ‘Others’ were net buyers in the secondary market. The ownership pattern of Central Government securities indicates that share of commercial banks stood at 38.04 per cent at end-June 2022 as against 37.75 per cent at end-March 2022.