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Quarterly Report on Public Debt Management_January to March 2020

Since Apr-June (Q1) 2010-11, Public Debt Management Cell (PDMC) (earlier Middle Office), 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 January – March 2020 (Q4 FY20).

 

During Q4 of FY20, the Central Government issued dated securities aggregating to ₹76,000 crore as against ₹1,56,000 crore in Q4 of FY19. The weighted average yield of primary issuances softened further to 6.70 per cent in Q4 FY20 from 6.86 per cent in Q3 of FY20. The weighted average maturity of new issuances of dated securities was higher at 16.87 years in Q4 of FY20 as compared to 16.47 years in Q3 of FY20. During January–March 2020, the Central Government raised ₹2,30,000 crore through the issuance of Cash Management Bills.The Reserve Bank conducted OMOs/ Special OMOs to inject liquidity into the system during the quarter ended March 2020. The net average liquidity absorption by RBI under Liquidity Adjustment Facility (LAF) including MSF was ₹3,03,464 crore during the quarter. The surplus market liquidity was also on account of the introduction of long term repo operations by the Reserve Bank from the fortnight beginning February 15, 2020.

 

The total liabilities (including liabilities under the ‘Public Account’) of the Government, increased to ₹94,62,265 crore at end-March 2020 from ₹93,89,267 crore at end-December 2019. Public debt accounted for 90.9 per cent of total outstanding liabilities at end-March 2020. Nearly 29 per cent of the outstanding dated securities had a residual maturity of less than 5 years. The holding pattern indicates a share of 40.4 per cent for commercial banks and 25.1 per cent for insurance companies at end-March2020.

 

The yields on G-Secs showed a downward movement from January to March 2020. This reflected the impact of several developments in the wake of the pandemic across the world; namely thereduction in the policy repo rate by 75 bps by the MPC of the Reserve Bank,an off-policy cut of 50 bps in the target range for the Federal Funds rate to 1-1.25 per cent by the US Fed and a sharp decline in crude oil prices. Central Government dated securities continued to account for a major share of total trading volumes in the secondary market, with a share of 84.0 per cent in total outright trading volumes in value terms during Q4 of FY20.

 

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