The rating agency ICRA in its latest report has said that the issuance of government-fully serviced bonds (GoI-FSBs) has significantly shot up to Rs 64,192 crore during the financial year 2019 as compared to Rs 15,095 crore during FY18. It noted that such borrowings are estimated to have accounted for 0.34 percent of Gross Domestic Product (GDP) for FY19, as against 0.09 percent of GDP for FY18.
According to the report, the total outstanding value of these GoI-FSBs stood at Rs 88,454 crore at the end of FY19. It explained that the purpose of these borrowings has been to meet the expenditure towards various schemes of government by raising extra-budgetary resources (EBR) by various public sector entities (PSEs). It added that such expenditure may have otherwise required a budgetary provision from the government in the year of these borrowings itself and increased the reported fiscal deficit.
ICRA said that the continuity of similar issuances in future will depend on the government’s stance with respect to accounting for such spending as part of the budgeted expenditure or not. It also said that given the pressure to reduce its fiscal deficit while continuing with social sector spending, similar issuances in future cannot be ruled out. It noted that GoI-FSBs accounted for significant share of the overall corporate bond issuances during FY19.