New Delhi: It is increasingly worrying that debt dominates the incumbent Modi Government’s fiscal liabilities. The government debt has scaled up by another 2.2 per cent in the first quarter of the fiscal year 2023-24. According to a report released by the finance ministry the total gross debt now stands at Rs 159.53 lakh crore, a sizable increase from the Rs 156.08 lakh crore reported at the end of March.
Public debt dominates the government’s financial liabilities, constituting 89.5 per cent of the total gross liabilities during the quarter. A scrutiny of the debt structure explains that a substantial portion of the outstanding dated securities have a residual maturity of less than five years, underscoring the presence of short-term debt instruments in the government’s financial portfolio.
During the initial quarter of the fiscal year 2023-24, the central government successfully raised a gross amount of Rs 4.08 lakh crore through the issuance and settlement of dated securities, with a net of Rs 2.71 lakh crore after accounting for switches.
The weighted average yield (WAY) of these issuances for the quarter was 7.13 per cent, reflecting the average interest rate on government debt during this period. This figure marks a slight reduction from the 7.34 percent WAY reported in the preceding quarter, signaling potential shifts in market conditions.
Additionally, the government’s debt portfolio revealed a weighted average maturity (WAM) of 17.58 years for the first quarter of the current fiscal year, showing a strategic focus on long-term debt management compared to the previous quarter’s 16.58 years.
Trading activities in the secondary market were notably concentrated within the 7-10-year maturity range, predominantly due to heightened trading in the 10-year benchmark security.
Private sector banks emerged as the primary trading segment in the secondary market, commanding a substantial share of 22.59 per cent in “Buy” deals and 25 per cent in “Sell” deals for the total outright trading activity. Foreign banks, public sector banks, primary dealers and mutual funds also played active roles in this marketplace.
In terms of net trading activities, foreign banks, insurance companies, private sector banks and primary dealers acted as net sellers, while public sector banks, cooperative banks, financial institutions (FIs), mutual funds and other entities emerged as net buyers in the secondary market.
